A Palestinian man threw a chemical substance believed to be acid at an Israeli family in the occupied West Bank today, injuring a man and four children, Israeli police and the military said.

The assailant was shot and wounded immediately after the attack, which took place at a checkpoint south of Jerusalem.

Police spokeswoman Luba Samri said the attacker had "poured an unknown substance suspected to be acid on a Jewish family." 

She said a civilian at the scene shot and wounded the assailant.

The Israeli military said the Israeli man had stopped to pick up the Palestinian as a hitchhiker and then the attack occurred.

Palestinians residents named the attacker as Jamal Ghayyada, 46, from the nearby village of Nahalin, saying he was mentally unstable and had received treatment at a mental health clinic in Bethlehem.

He had been arrested before, they added.

The incident comes at a time of heightened tension between Palestinians and Israelis, particularly in the West Bank and East Jerusalem, territories Israel seized in a 1967 war and Palestinians want for an independent state, together with Gaza.

There was no immediate claim of responsibility for the attack.

Over the past four months, ten Israelis and a foreign visitor have been killed by Palestinians in knife or car-based attacks, while at least a dozen Palestinians have also been killed, including most of those who carried out the killings.

On Wednesday, a Palestinian minister died shortly after a confrontation with an Israeli border policeman in the West Bank.

The policeman grabbed the minister by the neck during a scuffle and minutes he collapsed with breathing problems.

An Israel official who attended the autopsy said the minister had died of a heart attack possibly brought on by stress, while the Palestinian pathologist concluded that the grab to the neck more directly lead to heart failure.

In the Gaza Strip, tens of thousands marched in celebration of the 27th anniversary of the founding of the Islamist Hamas group, in the largest show of support for the organisation there since a five-week war with Israel that ended in August.

In the hostilities, more than 2,100 Palestinians were killed, most of them civilians, Palestinian officials said.

More than 70 Israelis were also killed, most of them soldiers.