Two Palestinians held as three people killed in stabbing rampage in Israel

Israeli police said forces have detained two Palestinians after three people were killed in a stabbing attack last week, sparking a massive manhunt and keeping the country on edge.

Two attackers went on a stabbing rampage in the ultra-orthodox city of Elad on Thursday, Israel's Independence Day, killing three and wounding at least four others before fleeing.

The stabbings were the latest in a series of deadly assaults deep inside the country in recent weeks.

The incident came as Israeli-palestinian tensions were already heightened by violence at a major holy site in Jerusalem sacred to Jews and Muslims.

Prime Minister Naftali Bennett told his cabinet that forces captured "terrorists awash with incitement who killed with axes and unimaginable cruelty".

He said Israel was entering a "new stage in the war on terror", and said the country was establishing a civilian national guard that would be deployed in emergency situations like the kinds of attacks Israel has witnessed in recent weeks.

"The Israeli government's main goal is to restore personal security to Israeli citizens," he said.

A joint statement by police, the military and the Shin Bet internal security agency said the men, identified as 19 and 20-year-old Palestinians, were detained near a quarry not far from Elad following a search that began on Thursday by special forces and commando units using helicopters and other means.

Images in Israeli media showed masked security forces confronting the men, who appeared to be beneath a green shrub in a rugged patch of land.

As forces scoured the area looking for the men, police called on the public to avoid the area, and urged Israelis to report suspicious vehicles or people to them.

Police said the alleged attackers were from the town of Jenin in the occupied West Bank, which has re-emerged as a militant bastion in the latest wave of violence - the worst Israel has seen in years.

Several of the attackers in the recent violence have come from Jenin.

At least 18 Israelis have been killed in five attacks since March, including another stabbing rampage in southern Israel, two shootings in the Tel Aviv area, and a shooting last weekend in a West Bank settlement.

Nearly 30 Palestinians have died in violence – most of whom had carried out attacks or were involved in confrontations with Israeli forces in the West Bank.

But an unarmed woman and two apparent bystanders were also among those killed and rights groups say Israel often uses excessive force.

The violence has been fuelled by tensions at a Jerusalem hilltop compound holy to both Muslims and Jews, where Palestinians have clashed recently with Israeli police.

The Al-aqsa Mosque compound is the third holiest site in Islam and is built on a hilltop that is the holiest site for Jews, who refer to it as the Temple Mount.

It lies at the emotional heart of the Israeli-palestinian conflict.