By Ali Sawafta

DUMA, West Bank (Reuters) - Suspected Jewish attackers torched a Palestinian home in the occupied West Bank on Friday, killing an 18-month-old child and seriously injuring his parents and brother, an act that Israel's prime minister described as terrorism.

The house in Duma, a village near the city of Nablus, had its windows smashed and fire bombs thrown inside before dawn as the family slept, the military and witnesses said. Graffiti in Hebrew reading "revenge" was scrawled outside, below a Star of David.

The child's parents and four-year-old brother were flown by helicopter to Israeli hospitals and were in critical condition. A second house, which was empty, was also set ablaze.

It was the worst attack by Israeli assailants since a Palestinian teenager was burned to death in Jerusalem a year ago. That followed the killing of three Israeli teenagers by Palestinian militants in the West Bank.

The Israeli military boosted forces in the area to search for the suspects, described by a spokesman as "two masked terrorists", and prevent any escalation. The Palestinian Islamist group Hamas called for revenge.

Ibrahim Dawabsheh, a Duma resident, said he heard people shouting for help from the house and rushed to it. "I saw two masked men outside," he told Reuters. He went to get help and when he returned they had gone.

"We found the parents outside with burns, they said there was another son in the house. We brought him out and then they said there was another boy inside, but we couldn't reach the bedroom because of the fire. He was left inside until rescue forces came," Dawabsheh told Reuters.

Pictures circulated by Palestinian media on the Internet showed a smiling, chubby-faced boy, named as Ali Dawabsheh. Footage from the house showed blackened walls and singed family photos scattered across charred belongings.

Several hundred people marched at his funeral procession calling for retribution. "With our souls and blood we shall redeem you, martyr," they chanted as the child's flag-draped body was carried through the village for burial.

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"TERRORISM"

The attack was widely condemned in Israel. Prime Minister Benjamin Netanyahu said he was shocked and promised that "all means" would be used to bring the assailants to justice. "This is a terrorist attack. Israel takes firm action against terrorism, no matter who its perpetrators are," he said.

After visiting the toddler's brother at hospital, Netanyahu told reporters he had phoned Palestinian President Mahmoud Abbas and said Israel was committed to find the assailants.

Earlier, Abbas said he would submit the attack as evidence to the International Criminal Court. "It is a war crime, a humanitarian crime," he told reporters.

A spokesman for Abbas held Israel responsible. "Such a crime would not have occurred if the Israeli government did not insist on pursuing settlements and protecting settlers," Nabil Abu Rdainah said.

Part of Netanyahu's right-wing coalition is the pro-settlement Jewish Home party. Its leader Naftali Bennett was quick to denounce the attack, but Palestinians accused the party of laying the ground for it.

The U.S. State Department said in a statement it "condemns in the strongest possible terms last night's vicious terrorist attack." The United Nations, European Union, Jordan and other countries also issued condemnations.

"PRICE TAG"

Hamas spokesman Hussam Badran called for retaliation. "This crime has made occupation soldiers and settlers everywhere legitimate targets," he said.

Fearing the killing would provoke violence in Jerusalem, police restricted entrance to al-Aqsa mosque for Friday prayers to men over the age of 50 and to women.

Some stone-throwing erupted outside the Old City, police said, with one officer lightly injured. In the West Bank city of Hebron stone-throwing clashes between Palestinians and Israeli soldiers broke out after Friday prayers.

Near Ramallah Israeli soldiers opened fire at a Palestinian who threw a fire-bomb at them, the military said and medics said he was seriously injured.

The police said a special task-force was investigating the killing, along with the Shin Bet security service.

Israeli Police spokeswoman Luba Samri said the torching appeared to have been a "Price Tag" attack, a reference to settlers who exact retribution for Israeli government curbs on settlement expansion.

Israel tore down two illegal structures in the Beit El settlement near Ramallah and removed dozens of people from another settlement near Nablus on Wednesday, prompting protests.

The "Price Tag" group has been blamed for torching a number of mosques and homes in the West Bank in recent years. Those attacks caused damage but no casualties.

Though Israel has promised to crack down on such assailants only a handful of indictments have been handed down.

The Palestinians seek a state in the West Bank, East Jerusalem and the Gaza Strip. In the West Bank, they have limited self rule but nearly 60 percent of the territory remains under control of the Israeli military.

Israeli settlements are considered illegal under international law. The last round of U.S.-brokered peace talks between Israel and the Palestinians broke down in 2014.

(Additional reporting by Maayan Lubell and Allyn Fisher-Ilan in Jerusalem and Emily Stephenson in Washington; Writing by Maayan Lubell; Editing by Luke Baker, Giles Elgood and Anna Willard)