Video footage of an Israeli soldier firing what appears to be a rubber bullet at point-blank range at a bound and blindfolded Palestinian detainee has led to an army investigation.

The incident occurred three weeks ago during protests in the village of Nilin against the construction of Israel's barrier in the occupied West Bank.

A video, taken by a villager and released on Sunday by the Israeli rights group B'Tselem, showed a soldier firing his rifle toward a Palestinian detained at the protest. The rifle appeared to have been modified to fire rubber-coated metal bullets.

The protester had been tied up and blindfolded and was standing only a few centimetres (inches) away.

B'Tselem said the man sustained bruises.

An army statement said a military doctor who examined him found he had been "very slightly wounded with swelling to a toe on his right foot".

"This was a serious incident in stark violation of the (military's) rules of conduct and safety," the army statement said. "The advocate-general ... ordered a military police investigation into the incident upon receiving the footage."

Israeli media reports said the soldier who fired the shot had been arrested. Asked about the reports, a military spokesman said: "When the investigation is over and the results are in, steps will be taken."