A Palestinian official described the incident as an "execution".

The latest in a near-daily series of security incidents in the West Bank took place before dawn on Monday in the Al-Jalazoun refugee camp near Ramallah.

The Israeli military said soldiers went into the camp to apprehend an individual suspected of "terror activity".

"Two suspects attempted to carry out a ramming attack against IDF soldiers," the Israeli military said.

"The soldiers responded with fire and neutralised the two suspects."

The account was disputed by a spokesman for Palestinian President Mahmoud Abbas, who said the troops had carried out an "execution".

"Such a reckless policy will not bring security or stability for anyone," a spokesman for Nabil Abu Rudeineh said.

Awatef Basbous, the mother of one of the dead men, said her son was going to his job at a bakery when he was shot.

"It never crossed my mind they would kill him on his way to work," she said.

More than 70 Palestinians have been killed this year as Israel steps up its operations in West Bank cities following a series of deadly Palestinian street attacks in Israel earlier in the year.

Raids by Israeli security forces and clashes with militant groups in West Bank cities such as Nablus and Jenin have escalated as Israel approaches a general election on November 1.

Initial media reports spoke of three casualties in the incident and one witness, who declined to be identified, said he had seen troops carrying three bodies away from the site.

However Israeli military spokesmen said there were only two casualties.

Australian Associated Press