An obscure Palestinian group has claimed responsibility for a truck ramming in Jerusalem that killed four Israeli soldiers and injured 17 others as families of the dead began holding funerals.

The previously unknown group calling itself The Martyr of Baha Alyan Collective said it had no outside links, acted on “political motives” and it was not the first attack carried out by a member.

It warned it will be followed by “a torrent of unyielding quality attacks”.

CCTV footage of the attack showed a truck mounting the kerb and ploughing through the crowd of soldiers.

The driver then reversed over injured people on the ground before being shot dead.

Israeli Prime Minister Benjamin Netanyahu earlier said “all signs point to the attacker being a supporter of the Islamic State (IS)”, but police said they have no evidence yet to release about possible IS links.

Israeli soldiers have raided the home of the 28-year-old Palestinian attacker, arresting his wife, father and brothers on suspicion of aiding him.

The soldiers also put up new roadblocks and checked residents’ cars on the streets of East Jerusalem neighbourhood Jabel Mukkaber.

But the attacker’s uncle Housam Farah Mahmoud said the family had no idea of his nephew’s intentions, and rejected Mr Netanyahu’s claim his nephew supported IS.

“He wants to try to convince the international community that the Palestinians are ISIS,” Mr Mahmoud said.

“But the Palestinian people have a good cause. They want their state and he is ignoring this right.”

Blaming IS ‘politically benefits’ Netanyahu

Times of Israel political correspondent Raoul Wootliff said it benefitted Mr Netanyahu politically if he could convince the world Palestinian acts of violence were no different to IS.

“This statement making a direct connection between the attacker and Islamic State really takes it to the next level and says that this attack is one of the same series of attacks that we are seeing,” Mr Wootliff said.

“It’s black and white with ISIS. With many other things we have nuance, we have grey. But ISIS is black and white.

Three of the killed were female with the other being male, Israel’s PM said. Photo: AAP

“ISIS is bad. We can all agree around the world that ISIS is bad, so by saying that this is part of ISIS, we are saying this is bad. There’s no nuance. There’s no side to it at all.”

A funeral has been held at Jerusalem’s Mount Herzl military cemetery for 22-year-old officer Shir Hajaj, who was among those killed in the attack.

Hundreds of young soldiers gathered in the cold, while her three sisters and mother screamed and cried hysterically as her coffin was lowered into the ground.

Police said the dead victims — three women and one man — were all in their 20s. Seventeen soldiers were also wounded and taken to hospital.

In the Palestinian Gaza strip, thousands of Palestinian militant group Hamas activists and supporters celebrated the attack on the streets of Jabalya refugee camp.

– ABC