Jerusalem shooting: Three people killed after drive-by shooting branded 'terrorist attack' by police

Two people were killed and the gunman was shot dead by police later

Israeli police secure the area following a shooting incident (REUTERS/Ronen Zvulun)

At least two people have been killed and five wounded in a drive-by shooting in Jerusalem in which the attacker was also shot dead by police.

Police spokeswoman Luba Samri said the attacker, thought to be Palestinian, sped toward a busy stop of the city's light rail service and opened fire, seriously wounding a woman waiting for a train.

He then continued driving and shot another woman who was seated in her car before speeding off toward an Arab neighborhood in east Jerusalem.

Ms Samri said police officers on motorcycles chased the assailant, who eventually stepped out of his vehicle and opened fire at them. A police officer was critically wounded in the shootout.

The shooting has been described as a terrorist attack by police spokesman Micky Rosenfeld.

A number of local journalists reported that Hamas, who govern the Gaza Strip, welcomed the attack as a "heroic act" and "natural response" to Israeli oppression.

Images showed bullet holes in the side of the attacker's car, a white saloon type vehicle.

A spate of Palestinian assaults, mainly stabbings, has killed 34 Israelis and two visiting Americans since it began just over a year ago, around the Jewish high holidays.

About 218 Palestinians have been killed during that period. Israel says the vast majority of them were attackers.

Israel blames the violence on a Palestinians campaign of lies and incitement. The Palestinians say it derives from frustration over nearly 50 years of occupation.

Internal Security Minister Gilad Erdan said there were no specific warnings of an attack ahead of time and the quick response of security forces on the scene prevented a deadlier result. He repeated his previous criticism of social media sites that allow militants to spread their hateful messages of incitement.

"It has an impact. It pushes people out to the streets to commits acts of murder and terror," he said.