The 32-year-old was identified as Meir Tamari by the Shomron Regional Council, the Israeli body which administers settlements in the northern West Bank.

He was fatally wounded beside the Hermesh settlement, where he had lived for the past four years according to the council.

Tamari was transferred to Hillel Yaffe hospital in Israel where he was pronounced dead, a statement from the facility said.

The Israeli military said troops "began pursuing the terrorists" behind the shooting at the settlement entrance, without identifying the alleged assailants.

The Al-Aqsa Martyrs' Brigades, the armed wing of Palestinian president Mahmud Abbas's Fatah party, said "our soldiers" were behind the attack.

"On the road to Hermesh settlement, they opened fire towards a vehicle which was carrying a settler," the militant group said in a statement.

The West Bank has been occupied by Israel since the Six-Day War of 1967 and settlements built in the Palestinian territory are deemed illegal under international law.

The office of Israeli Defence Minister Yoav Gallant said he would "hold a situation assessment together with senior officials in the defence establishment" following the shooting.

The latest death comes amid a surge in violence in recent months, with dozens killed across the northern West Bank in particular.

Since the start of the year, at least 155 Palestinians, 21 Israelis, a Ukrainian and an Italian have been killed in violence linked to the Israeli-Palestinian conflict, according to an AFP tally compiled from official sources.

The figures include combatants as well as civilians and, on the Israeli side, three members of the Arab minority.