Israeli troops have shot and fatally wounded a suspected Palestinian fighter during a raid on his home in a refugee camp in the occupied West Bank, the Israeli army and Palestinian security officials said.

Palestinian security sources named the dead man as Islam al-Tubasi, 21, and said he was shot as troops stormed his home in the Jenin refugee camp in the northern West Bank.

"The wanted suspect was injured, evacuated by military forces for further treatment and later died of his wounds in an Israeli hospital," an Israel military statement said on Tuesday.

The sources had no information on whether he was engaged in armed activity but said that his brother, who had been active in Islamic Jihad, was shot dead by troops in 2006.

The Israeli army statement said that as soldiers attempted to arrest Tubasi, a crowd gathered and began attacking them with gunfire, petrol bombs and improvised explosives.

"Amidst the turmoil, the target of the activity was identified attempting to flee the area. The security forces managed to detain the suspect using live fire," the statement said.

It said that troops also had shot and wounded one of the rioters, who was taken to an Israeli hospital.

The Israeli military spokesman, Peter Lerner, said there would be a review of the incident.

"The ongoing terrorist threat from the Jenin area requires that the IDF (Israeli army) maintains operational access to the area," Lerner was quoted as saying on a blog by the Israeli army.

Last month, two Palestinians were killed in clashes during an arrest raid in Jenin.

Gaza incursion

In a separate development, Israeli forces made a limited incursion east of Khan Younis in the southern Gaza Strip.

Local residents said that several military vehicles, including bulldozers, penetrated 200 metres east of Khuza'a village and bulldozed lands along the security fence and moved north towards the neighbourhood of Abasan.

They also said that Palestinian fighters deployed in the area fired at the Israeli forces who were said to be firing randomly towards agricultural fields.

Israel decided to close the Karam Abu Salem crossing into the Gaza Strip on Wednesday (to be re-opened on Sunday) before of the Jewish holiday of Sukkot, Raed Fattouh, the head of the Coordination Committee for entry of goods in the Gaza Strip, said.

Karam Abu Salem, the only commercial crossing operating in Gaza for the entry of goods, aids and fuel is closed every Friday and Saturday.