A Palestinian mosque was set alight in the occupied West Bank on Wednesday and graffiti in Hebrew at the scene suggested the attack was carried out by a far-right Israeli group, officials said.

No one was hurt in the overnight attack in Al-Jaba'ah village near Bethlehem, during which the mosque's windows were broken and something burning was thrown inside, Mayor No'man Hamdan said.

"God's mercy and people's alertness when the fire started prevented it from consuming the entire mosque. Part of the carpets burned," he told Reuters.

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Hamdan said Hebrew slogans had been scrawled on the walls, including "Revenge for the Land of Zion" and "Price Tag", a phrase used by an ultra-nationalist Jewish group that has carried out scores of attacks on Palestinian targets since 2008.

The group has said "price tag" refers to the price the Israeli government would have to pay if it curbs Jewish settlements in the West Bank or accepts a Palestinian state.

Al-Jaba'ah is close to Gush Etzion, a large area of settlements just outside Bethlehem.

Israeli police said they were investigating the attack.