An overnight explosion in the Israeli coastal town of Netanya, which left four people dead, was caused by a gas leak and was not related to any criminal or nationalist issues, police said on Friday.

The blast occurred late on Thursday in the centre of the seaside town, flattening a four-storey building and injuring around 65 people, many of whom were in a ground-floor restaurant.

"The explosion was apparently caused by negligence," police spokesman Micky Rosenfeld told AFP, saying the dead were three women and a man and that the injured numbered at least 65.

Rosenfeld said one of the dead was a French-Israeli woman of around 20, but he had no further information about the identities of the other victims.

Officials at Netanya's Laniado hospital confirmed that "many French speakers" were among the injured, although they did not have a precise figure and it was unclear whether they were French tourists or Israelis with dual nationality.

By Friday morning, three French-Israeli teenage girls were still unaccounted for, family members told AFP, although police said no further bodies had been pulled from the rubble.

"The results of the investigation into the blast show it was not caused by an attack or through criminal gang-related activity," Rosenfeld said, pointing to a faulty gas canister.

Netanya is home to a large French-speaking community and draws a sizeable number of Jewish tourists from France every year. It is also known as a town where figures from the criminal underworld have been known to settle scores.

Rosenfeld said a scrap metal dealer had been arrested in connection with the incident, and an employee of the gas company which supplied the canisters was also being questioned.

Investigators said the gas worker had come to examine the pipes around the building several hours before the explosion, following complaints from local residents but had found nothing amiss.

The blast flattened the entire building, leaving people buried under the rubble, with cranes brought in to try to get them out, witnesses told Israeli radio.

At least one witness reported a strong smell of gas hanging over the debris.