Tensions are rising in the West Bank after speculation Jewish settlers were to blame for desecrating a Muslim holy place.

A Palestinian mosque was vandalized in the West Bank and Hebrew graffiti suggests that Israeli settlers were responsible. Prayer carpets and Muslim holy books were set on fire.

Palestinian resident Attaf Abu Roud told Israel's Army Radio that settlers entered the village of Yasuf before dawn.

"There is Hebrew words on the floor, in the entrance. Then when you enter inside, you find that the carpets have been burned and also the shelves," he said.

The graffiti bore the settlers' slogan "price tag." They say there will be a heavy price for the Israeli government's policy of freezing construction in West Bank settlements.

The right wing government of Prime Minister Benjamin Netanyahu imposed the freeze last month under pressure from the United States, which sees the settlements as an obstacle to peace. Since then, Jewish settlers have stepped up attacks on Palestinians. The settlers, many of whom are religious, claim the right to build in all the biblical Land of Israel.

The Israeli army described the vandalism at the mosque as a grave incident and vowed to catch the perpetrators. In a statement, Defense Minister Ehud Barak said the incident was "an act of extremism" aimed at harming Israel's efforts to revive peace talks with the Palestinians.

Palestinian officials accused Israel of turning a blind eye to the lawlessness of the settlers.