Israeli Deputy Prime Minister Moshe Ya'alon on Sunday condemned as terrorism last week's Jewish gang attack on several Palestinians in downtown Jerusalem, and a suspected Jewish firebombing of a vehicle in the West Bank.

"The hate crimes committed over the weekend against Arabs in Judea and Samaria (the West Bank) and Jerusalem are intolerable, outrageous and must be firmly dealt with," he said in a statement Sunday.

On Thursday, an unknown assailant hurled a firebomb at a Palestinian taxi travelling in the West Bank south of Jerusalem, injuring five Palestinian family members who suffered moderate to serious wounds.

Police officials attributed the attack to local settlers who were motivated by nationalistic motives.

On early Friday, dozens of Jewish youths attacked three young Palestinians at Jerusalem's Zion Square, wounding one severely. One suspected was apprehended.

"These are terrorist attacks," Ya'alon said, adding that "they run contrary to Jewish morality and values, and constitute first and foremost an educational and moral failure."

Israel cannot afford such phenomena and it is the duty of elected officials to use whatever means necessary to fight an all- out war to ensure these "heinous acts" will not be repeated, Ya' alon said.

The U.S. State Department also took notice, calling the events "terrorist incidents."

This is the first time Washington cited violence by settlers against Palestinians -- regarding Thursday's incident -- as terrorism, the Ha'aretz daily reported Sunday.

"We note that the Israeli government had also condemned this heinous attack and pledged to bring the perpetrators to justice," a U.S. State Department's statement said.

"We look to Israeli law enforcement officials to do so expeditiously. We urge all parties involved to avoid any action that could lead to an escalation of violence," it concluded.

On Saturday, Israeli Prime Minister Benjamin Netanyahu sent a reassuring message to Palestinian National Authority President Mahmoud Abbas following the firebombing.

Netanyahu's personal envoy, Yitzhak Molcho, further assured the Palestinians that Israel's security forces were doing everything possible to locate and arrest those responsible for the attacks.