Suspected Israeli extremists fire smoke grenades into the house of a Palestinian family in the occupied West Bank and scrawl Hebrew graffiti on its walls, police say.

The family was asleep when the Tuesday morning attack happened in the town of Beitillu but escaped unscathed, an Israeli police spokesman said.

The inscription on the wall referred to "the detainees of Zion” who have been arrested by Israel in connection with a deadly July arson in which Palestinian baby boy Ali Dawabsheh lost his life.

In the attack, Israeli settlers threw firebombs and Molotov cocktails into two Palestinian houses in the town of Duma, located 25 kilometers (15 miles) southeast of Nablus in the West Bank.

The toddler’s 32-year-old father, Sa’ad Dawabsheh, died a week after the assault and his mother Riham Dawabsheh succumbed to severe burns she had sustained in the incident.

A file picture taken on July 31, 2015 shows a man holding a picture of Palestinian toddler Ali Dawabshesh, who died alongside his parents, when their house was set on fire by settlers in the village of Duma, West Bank. ©AFP

United Nations Secretary-General Ban Ki-moon has denounced the incident as a “terrorist act,” calling for the perpetrators to be promptly brought to justice.

Israeli extremists have for years vandalized or set fire to Palestinian property, as well as mosques and churches.

Regime forces have also killed some 130 Palestinians since early October amid stepped-up raids by Israeli extremists on the al-Aqsa Mosque which have sparked widespread Muslim protests.