JERUSALEM - A Palestinian gunman opened fire at passersby and vehicles outside the Israeli city Tel Aviv late Tuesday, killing five people in the third shooting or knife attack in a week, prompting the police to raise its alert level nationwide to "the highest possible".

The shooter was shot dead by police during the incident that took place in the city of Bnei Brak, a crowded suburb of Tel Aviv, said the police and the Magen David Adom (MDA), Israel's national emergency medical service.

"The terrorist is confirmed dead," Police Spokesman Eli Levi told the state-owned Kan TV news. The perpetrator was armed with an M-16 rifle, said another police statement.

The police said in a statement that the shooter was a Palestinian resident from the occupied West Bank who stayed in Israel without permits.

Kan TV news reported that the attacker, a 27-year-old man, was previously convicted of illegal arms trade and served about six months in prison before being released in late 2015.

A paramedic with the United Hatzalah rescue service told Channel 12 that at least one of the fatalities was a policeman.

Eyewitnesses told local television that a gunman on a scooter opened fire at the balconies of apartments and then at people in the street.

No group has yet to claim responsibility for the attack, the third deadly one in Israel in a week.

Later Tuesday, the police said Commissioner of Israel Police Kobi Shabtai has decided to raise the alert level to the highest possible, which is "the highest it has been since the fighting in Gaza in 2021."

Starting from Wednesday, thousands of police officers will be deployed to guard schools, kindergartens, bus stations, and crowded places across the country, said a police statement.

In the following days, most of the police efforts will be put into "fighting terror, increasing their presence in the streets and securing the civilian population," it said.

Meanwhile, the army said it will send additional troops, including four battalions, to the West Bank after assessing the situation.

This was in addition to another four battalions already sent to reinforce the area on Monday, a day after a fatal shooting attack took place in the city of Hadera in northern Israel, said an army statement.

Israeli Prime Minister Naftali Bennett said "Israel is facing a wave of murderous Arab terrorism," after the deadly shooting on Tuesday.

"The security forces are at work. We will fight terrorism with persistence, diligence and an iron fist," the premier was quoted by his office's statement as saying.

The PM's office said Bennett held a security consultation with top security officials on Tuesday night. He will host an emergency meeting of the security cabinet on Wednesday.