Tel Aviv: A Palestinian went on a stabbing spree today on a bus here, injuring 12 Israelis before being shot, the latest in a series of lone-wolf terror attacks, with Prime Minister Benjamin Netanyahu accusing the Palestinian Authority of "poisonous incitement" against the Jewish-state.

Four of the victims were seriously injured and eight others including the bus driver suffered moderate injuries, a spokesman for the rescue services, Magen David Adom, said.

Pictures released by the police showed a large knife lying on the ground. The stabbing attack took place on a bus on Menachem Begin road, a major thoroughfare in south Tel Aviv.

The attacker tried to flee the scene on foot but he was chased and shot in leg by a passing prison officer. He was taken to hospital and is being questioned.

The assailant is a 23-year-old man from the West Bank city of Tulkarm, illegally residing in Israel, Internal Security Minister Yitzhak Aharonovich said, adding that the "terrorist was in Israel without work visa".

The stabbing is being treated as a "terror attack," Israel Police foreign press spokesman Micky Rosenfeld said. Meanwhile, Islamist Hamas, which controls the Gaza Strip and whose charter vows complete destruction of Israel, hailed the stabbing attack on bus commuters as a "heroic act".

"The attack carried out this morning is a bold, heroic act and a natural response to the crimes of the occupation and terrorism against the Palestinian people," Izzat al-Risheq, a member of Hamas' political bureau, said.

Israeli officials say the attacks stem from incitement by Hamas and Palestinian President Mahmoud Abbas, a charge reiterated by Netanyahu today.

"The terrorist attack in Tel Aviv is the direct result of the poisonous incitement being disseminated by the Palestinian Authority against the Jews and their state," Netanyahu said, adding, "This same terrorism is trying to attack us in Paris, Brussels and everywhere."

Netanyahu also spoke to the commander of the Nachshon police unit whose men neutralised the attacker and praised them for their determined action that saved lives.

"We will continue to act with force against terrorism that has tried to hit us since the establishment of the state and we will make sure that it does not achieve its goals," the Israeli Prime Minister said.

The incident is just one of a series of 'lone-wolf' terror attacks that have plagued Israel in recent months, killing about a dozen people, in which assailants have used knives, meat cleavers and vehicles as weapons.

Tensions have been rising between Israelis and Palestinians since last June, when three Israeli settlers were kidnapped and killed in the West Bank. The kidnappings set off a series of events that led to the 50-day Gaza war, which left more than 2,100 Palestinians and 71 Israelis dead.

In November, five Israelis were killed and several more wounded in a terror attack at a synagogue in the Jerusalem neighbourhood of Har Nof, while an Israeli soldier was killed in a knife attack in Tel Aviv, another Israeli woman was stabbed to death in the occupied West Bank in a separate knife attack.