More than 80,000 Palestinians were barred from entry to Israel on Thursday after four people were killed in a shooting attack in Tel Aviv.

Two Palestinians dressed as businessman opened fire on shoppers in the Israeli capital on Wednesday night, killing four and wounding six. No group has claimed responsibility for the attack in a popular shopping complex near Israel's Defence Ministry but Hamas and other Palestinian militant groups have praised the act.

Both men are now held in custody. They are cousins from a village near Hebron, in the occupied Palestinian West Bank.

The attacks follows a period of calm in recent weeks after a spate of Palestinian stabbings and shootings on Israeli streets. It is the deadliest attack since the latest wave began in October.

After security consultations overseen by Prime Minister Benjamin Netanyahu, the military said it was rescinding some 83,000 permits issued to Palestinians from the West Bank to visit relatives in Israel during Ramadan.

Such measures, including restrictions on access to the Al-Aqsa Mosque compound, the holy site in the heart of the Old City that Jews refer to as Temple Mount, have in the past lead to increased tension with the Palestinians.

After the Tel Aviv attacks fireworks were set off in parts of the West Bank. In some refugee camps people sang, chanted and waved flags. It wasn't a response to the breaking of the Ramadan fast in the evening, locals said, but a celebration of the killings.

Hamas spokesman Hussam Badran called it "the first prophecy of Ramadan" and said the location of the attack, across the road from Israel's fortified Defence Ministry, "indicated the failure of all measures by the occupation" to end the uprising.

During the recent wave of violence, Israel's government has repeatedly criticised Palestinian factions for inciting attacks or not doing enough to quell them.

The Popular Front for the Liberation of Palestine, the largest group in the Palestine Liberation Organization after Fatah, the Western-backed party of President Mahmoud Abbas, described the killings as "a natural response to field executions conducted by the Zionist occupation".

The group called it a challenge to far-right nationalist Avigdor Lieberman, Israel's newly appointed defence minister, who must decide how to respond to the violence.

The United Nations' special coordinator for the Middle East, Nickolay Mladenov, condemned the shootings and expressed alarm at the failure of Palestinian groups to speak out against the violence.

"All must reject violence and say no to terror," he said in a tersely worded statement. "I am shocked to see Hamas welcome the terror attack. Leaders must stand against violence and the incitement that fuels it, not condone it."

Netanyahu visited the scene minutes after arriving back from a two-day visit to Moscow. He described the attacks as "cold-blooded murder" and vowed retaliation.

"We held a consultation about a series of offensive and defensive measures that we will implement," he said. "We will locate anyone who cooperated with this attack and we will act firmly and intelligently to fight terrorism."

One of the first steps taken was to shut down the area around Yatta and suspend 204 work permits held by relatives of the attackers.

Since October last year, 32 Israelis and two visiting US citizens have been killed by Palestinians. Israeli forces have shot dead at least 196 Palestinians, 134 of whom Israel has said were assailants. Others were killed in clashes and protests.

Additional reporting from Reuters.