Two people have been reported dead following a terror attack in Jerusalem.

According to reports, at least six people were injured in the attack at Ammunition Hill light rail station, on Sunday.

It is believed a 60-year-old woman and a police officer were killed.

The area has been closed off by police and security has been increased to prevent further attacks.

According to superintendent Micky Rosenfeld, Israel police's foreign press spokesman, the terrorist drove to a nearby junction, opened fire and hit a civilian.

The attacker, who was identified by Israeli police as a 39-year-old resident of Silwan, a Palestinian neighbourhood of east Jerusalem, fled the scene chased by police.

He was stopped in the nearby Arab neighborhood of Sheikh Jarrah, and after a shoot out with officers, the police successfully neutralised him.

The victims who were injured in the attack were taken to Hadassah University Medical Center on Mount Scopus.