The Israeli military on Tuesday demolished the family home of a Palestinian teenager in the occupied West Bank who killed an Israeli in a Jewish settlement a month ago and was shot dead in the attack.

Footage distributed by the military showed an armoured bulldozer tearing into the one-storey structure overnight in the village of Kaubar, north of the Palestinian city of Ramallah.

Rights groups have called such demolitions collective punishment, while noting that Israel's Supreme Court has upheld the practice, which Israeli officials have termed both punitive and a deterrence to potential attackers.

Mohammed Tareq Ibraham Dar Youssef, 17, broke into the settlement of Adam on July 26, and stabbed three people, killing Yotam Ovadia, 31. One of those wounded in the attack fatally shot and killed the Palestinian, the military said.

'We entered (the village) tonight to close a circle and we destroyed the terrorist's home,' Lieutenant-Colonel Liron Appleman, a battalion commander, said at the scene in the video clip provided by the military.

In a statement, the military said dozens of Palestinians hurled rocks, firebombs and pipe bombs at the troops, who responded with 'riot dispersal means'. It said none of the soldiers was hurt. There were no immediate reports of any Palestinian injuries.

Although stabbings and car-rammings carried out by Palestinians since late 2015 have become less frequent in the West Bank, tensions have remained high in the aftermath of US President Donald Trump's recognition of Jerusalem as the capital of Israel in December.

Palestinians seek to establish a state in the occupied West Bank and Gaza Strip with East Jerusalem as its capital. Israeli-Palestinian peace talks collapsed in 2014.