Israeli troops killed a Palestinian teenager Tuesday after apparently mistaking his group for stone-throwers as they returned from a swim, sparking outrage and debate about the security forces' use of firearms.

Palestinian officials harshly condemned the shooting, saying the 15-year-old was "murdered" while in a car in the occupied West Bank with four teenaged cousins, who were wounded by the gunfire.

Circumstances surrounding the shooting were unclear and the army was still investigating, but in a stark admission it said it appeared those shot were "uninvolved bystanders".

The military said the overnight shooting followed stone-throwing at Israelis travelling a road that cuts through the West Bank for several kilometres (miles) on its way from Jerusalem to Tel Aviv.

Israeli media reported two foreigners and one Israeli lightly wounded by stone-throwing. The stone-throwers were also said to have hurled firebombs at passing cars and poured oil on the road.

Soldiers opened fire on what they believed to be suspects, the army said, killing Mahmoud Rafat Badran and wounding the four others.

Two people were arrested, it said.

The army initially released a statement saying troops shot two people "after a number of Palestinians hurled rocks and Molotov cocktails at moving vehicles near the village of Beit Sira on route 443".

"An initial review suggests that as the mob continued, nearby forces acted in order to protect the additional passing vehicles from immediate danger and fired towards the assailants.

"Forces confirmed hits resulting in the death of one of the attackers."

Later, the army revised its account, with a spokeswoman saying that "it appears uninvolved bystanders were mistakenly hit during the pursuit."

- 'Cold-blooded assassination' -

Asked by AFP whether that included the person killed, she said yes, as well as those wounded.

During the current holy month of Ramadan, Muslims often go out and socialise late into the night following the end of the daytime fast.

"One of my nephews who lives in Qatar was staying with us," Badran's father Rafat said as received condolence visits in the council building in his home town of Beit Ur.

Mahmoud and the other cousins "decided to go together to the Aqua Park" in neighbouring Beit Sira, he said.

After several hours bathing they were returning home by car though an underpass in the early hours of the morning.

"A car appeared on the 443 road above them, armed men got out and fired at their moving car," said 51-year-old Rafat, his eyes red from grief and lack of sleep.

When news reached the family and relatives tried to reach the scene, "soldiers prevented us approaching by firing at us. They refused to allow Palestinian ambulances to evacuate the wounded," he said.

"Is this the same army that says it made a mistake? They are liars."

Palestine Liberation Organisation secretary general Saeb Erekat condemned the shooting in a statement that said Badran had been "murdered" and called it a "cold-blooded assassination".

Israel's response to Palestinian stone-throwers has been the subject of debate, with rightwing politicians calling for looser open-fire rules and human rights groups warning of the dangers of such policies.

In September, Prime Minister Benjamin Netanyahu vowed "war" on stone-throwers with tougher penalties and new rules for security forces on when to open fire.

Lawmakers later voted to impose a minimum three-year jail sentence on stone-throwers.

- Home demolition -

Netanyahu made the comments after a 64-year-old Israeli man died in an accident Israeli authorities said was caused by Palestinian stone-throwing.

The death preceded a wave of Palestinian unrest since October.

The violence has killed at least 209 Palestinians, 32 Israelis, two Americans, an Eritrean and a Sudanese.

Israeli authorities say most of the Palestinians were killed as they carried out knife, gun or car-ramming attacks.

Others were killed in clashes with security forces or by Israeli air strikes in the Gaza Strip.

Also on Tuesday, Israeli forces demolished the home of a Palestinian who killed a US tourist and wounded several Israelis in a March stabbing rampage in Tel Aviv.

An army spokeswoman said the Palestinian carried out the March 8 seafront knife attacks which killed 29-year-old Texan Taylor Allen Force and wounded at least 10 Israelis as US Vice President Joe Biden arrived for a visit.

The Palestinian was shot dead during the attack.

Netanyahu has expedited home demolitions of Palestinian attackers in a bid to deter violence.

Human rights groups say the measure amounts to collective punishment, forcing families to suffer for the acts of others.