The Jerusalem attacker had "all the signs" of being ISIS, Israel's Prime Minister has said.

The assailant drove his truck into a group of officer cadets as they disembarked from a bus that brought them to the Armon Hanatziv promenade, a spot known for its panoramic view of the walled Old City of Jerusalem.

Three women and one man, all in their 20s, were killed.

Authorities identified the truck driver as a Palestinian from Israeli-annexed East Jerusalem and said he was shot dead. His uncle, Abu Ali, named him as Fadi Ahmad Hamdan Qunbor, 28, a father of four from the Jabel Mukabar neighbourhood.

Benjamin Netanyahu did not give evidence for his claim about the Palestinian man who killed four soldiers in the deadliest attack in Jerusalem in months but the militant group has threatened to attack Israel.

Police spokesman Micky Rosenfeld said that nine Jabel Mukabar residents, including five members of the attacker's family, were arrested on suspicion of aiding the attacker.

The Israeli military regularly takes soldiers on educational tours of Jerusalem, including the Armon Hanatziv vantage point.

Netanyahu visited the scene and convened his security Cabinet, a forum of senior ministers, to discuss Israel's response. He said that security forces were controlling access in and out of the neighbourhood.

"We know the identity of the attacker. According to all the signs he is a supporter of Islamic State," the prime minister said.

A government source said ministers had called for the demolition of the attacker's home and for his body not to be returned to the family for burial. It also decided to detain without trial persons expressing sympathy for Islamic State.

The United States condemned the attack "in the strongest terms" and offered to help Israel work to determine who was behind the attack, National Security Council spokesman Ned Price said in a statement that also expressed condolences for the victims.

Roni Alsheich, the national police chief, told reporters he could not rule out that the driver had been motivated by a truck-ramming attack in a Berlin Christmas market that killed 12 people last month.

"It is difficult to get into the head of every individual to determine what prompted him, but there is no doubt that these things do have an effect," Alsheich told reporters.

In another attack claimed by Islamic State and involving a truck driven into a crowd, nearly 90 people were killed in the French city of Nice in July.

Actions inspired by Islamic State in Israel, the occupied West Bank and Jerusalem have been rare and only a few dozen Arab Israelis and Palestinians are known to have declared their sympathy with the militant group.

A wave of Palestinian street attacks, including vehicle rammings, has largely slowed but not stopped completely since it began in October 2015, with 37 Israelis and two visiting Americans killed in those assaults.

At least 231 Palestinians have been killed in violence in Israel, the occupied West Bank and the Gaza Strip in the same period. Israel says that at least 157 of them were assailants while others died during clashes and protests, blaming the violence on incitement by the Palestinian leadership.

The Palestinian Authority, which exercises limited self-rule in the West Bank, denies that allegation, and says assailants have acted out of frustration over Israeli occupation of land sought by Palestinians in peace talks that have stalled since 2014.

Hamas, the Palestinian Islamist group that controls the Gaza Strip, routinely praises those who carry out street attacks, and did so on Sunday.

"We bless this heroic operation resisting the Israeli occupation to force it to stop its crimes and violations against our people," Hamas spokesman Fawzi Barhoum told Reuters.

Nickolay Mladenov, the United Nations Special Coordinator for the Middle East Peace Process, sent his condolences to the families while condemning the attack and those praising it.

"It is reprehensible that some choose to glorify such acts which undermine the possibility of a peaceful future for both Palestinians and Israelis," Mladenov said in a statement.

Additional reporting from Reuters.