Two Israelis were shot dead and another wounded by a Palestinian man using a homemade gun in a West Bank factory on Sunday, the IDF has said.

A manhunt was underway for the 23-year-old suspect, who is understood to have been employed at the Barkan industrial zone, a joint Israeli-Palestinian operation near the settlement of Ariel.

The victims were named as Ziv Hajbi, 35, and 29-year-old Kim Yehezkel. Another woman aged 54 is in hospital.

IDF spokesman Jonathan Conricus said the suspect was not known to authorities but not believed to be a member of an armed group.

He added: "We know he is still armed and considered dangerous.”

One report suggested he was a disgruntled former employee who may have sought revenge after being dismissed from duty.

Security camera footage shared online appeared to show the Palestinian fleeing the site with a gun.

Police sources said the weapon he used was a homemade Carl Gustav rifle, known locally as a “Carlo”, and that it appeared to be a “lone-wolf attack”.

Prime Minister Benjamin Netanyahu expressed his condolences and said he was “sure we will bring the terrorist to justice soon”, Haaretz reported.

President Reuven Rivlin said: “This was not only an attack on innocent people going about their daily lives, it was also an attack on the possibility of Israelis and Palestinians co-existing peacefully.

“I call on the Palestinian leadership to condemn this murderous attack and to use the forces at their disposal to capture the terrorist and those who aided him.”