Shin Bet, Israel's domestic intelligence agency, says that Jewish extremists are forming new "terrorist" groups that are deliberately targeting Palestinians and Israeli peace activists, intelligence sources were quoted as saying yesterday.

Israeli officials have watched with alarm a sudden spike in attacks by Jewish zealots, particularly West Bank settlers, on Palestinian and Israeli property and personnel following the Israeli army's demolition of several homes in Migron, an illegal Jewish outpost in the occupied West Bank, 10 days ago.

Tensions are also rising because of Palestinian plans to seek membership of the United Nations in New York next week, a move that right-wing Israelis fear could lead to an eventual evacuation of West Bank settlements, viewed as illegal under international law, to make way for an independent state.

Shin Bet sources told the liberal Ha'aretz newspaper that the Jewish groups were essentially engaged in "terrorist activity" by planning attacks, conducting covert surveillance of Palestinian villages, and gathering data on Israeli activists. The disclosure reveals growing unease among the security forces at their inability to contain increasingly militant settlers, seemingly bent on exacting revenge for every move against them through so-called "price tag" attacks – where Palestinian property is destroyed for every hostile move towards the settlers by the Israeli authorities.

In recent days, settlers are suspected of defacing two Palestinian mosques, uprooting and setting fire to olive trees, torching cars and daubing graffiti on the walls of a Palestinian university in Birzeit. Vandals also broke into an Israeli army base, slashing tyres and spray painting "price tag" on army vehicles, and wrecked the engines of bulldozers used for the demolitions in Migron.

At the home of an Israeli activist who works for Israel's Peace Now, which monitors the expansion of Jewish settlements in the West Bank, the assailants' slogans included "Migron forever" and "Death to traitors". "They want to silence us, to scare us. It's not going to happen," said the activist, who did not want to be named.

In a statement, Peace Now called for "emergency measures against what is becoming the new Jewish underground".

Ideologically-motivated settlers, who believe they have a divine right to the West Bank, represent some of the most right-wing opinion in Israel. Though a majority of Israelis support a two-state solution, many settlers remain fiercely opposed to either a bi-national state or to Palestinian statehood, doubting that the two peoples could exist peacefully side by side.

"We need to erase the idea of a Palestinian state from people's minds and convince the world that Islam is a danger," Michael Ben-Ari, a right-wing politician and settler, told a workshop this week.

Belfast Telegraph