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Saudi Arabia and Qatar on Friday condemned a call by an Israeli minister for a flashpoint Palestinian town with Riyadh describing it as "racist and irresponsible".

Finance Minister Bezalel Smotrich, a far-right member of Israel's coalition government, made his comments on Wednesday, days after two Israeli settlers were shot dead in Hawara, prompting hundreds of others to attack the town in the north of the occupied West Bank.

"I think the village of Hawara needs to be wiped out," Smotrich said. "I think the State of Israel should do it."

Later, he said on Twitter that he "didn't mean to erase the village of Hawara, but only to act in a targeted way against the terrorists".

The Saudi foreign ministry expressed its "complete rejection of such racist and irresponsible statements, which reflect the massive violence and extremism the Israeli occupation entity is exercising against the brotherly Palestinians."

Qatar described Smotrich's comments as "hateful and provocative" and said it considered them "a serious incitement to a war crime".

Neither Saudi Arabia nor Qatar has diplomatic ties with Israel.

Israel is hoping to expand on breakthrough normalisation deals announced in 2020 with the United Arab Emirates, Bahrain and Morocco.

Riyadh has said repeatedly that it will stick to the decades-old Arab League position of not normalising relations with Israel before the conflict with the Palestinians has been resolved.

But it is showing signs of greater openness towards Israel, and announced last year it was lifting overflight restrictions on aircraft travelling to and from Israel.

UN human rights chief Volker Turk denounced Smotrich's comments on Hawara as "an unfathomable statement of incitement to violence and hostility".

On Wednesday the US State Department called them "irresponsible," "repugnant" and "disgusting".