Five-year-old Mahmoud Qabha died immediately from a gunshot wound after a bullet fired by a soldier on an armoured vehicle hit the child in his father's car, a witness, Ghassan Qabha, told Reuters. Two of his sisters were wounded in the shooting.
"Due to an operational mistake, a round was fired by the forces. As a result of the firing, a Palestinian child was killed and two Palestinian girls were wounded," an army spokesman said. He said the army had opened an inquiry.
The shooting was at a checkpoint at the entrance to Barta'a village, just southwest of the West Bank city of Jenin.
The incident occurred hours before Palestinian Prime Minister Mahmoud Abbas was due to hold talks with US President George W Bush in Washington, during which he was expected to ask Bush to put pressure on Israel to remove West Bank checkpoints.
A Palestinian woman was also seriously injured on Friday when Israeli troops opened fire while launching an incursion into Jenin city, Aljazeera’s correspondent in Jenin reported.
Israeli forces claimed they were tracking Palestinian fighters.
Eyewitness said that Israeli forces had surrounded Jenin and were conducting extensive search operations.
The Israeli army also said that 10 Palestinians had been arrested during the night, suspected of being involved in anti-Israeli attacks.
There has been a marked drop in unrest since the announcement of a truce by major Palestinian militant groups on 29 June but small-scale violence has continued.
This is the second such search operation in Jenin within 24 hours.
In other developments:
Earlier in the day, Israeli police restricted access for Muslims to a Jerusalem holy site, fearing protests by Palestinians against a decision to allow visits by Israelis and foreign tourists.
Police have banned men under the age of 40 from Haram al-Sharif, or the Noble Sanctuary.
According to sources, around a hundred police have also been deployed around the Muslim quarter in the walled old city of Jerusalem where the compound is located.
At a Thursday meeting attended by Palestinian Authority president Yasir Arafat, Palestinian officials denounced the visits to the site which have been taking place under police protection for more than a month.
The meeting, which included representatives from various Palestinian organisations, had "discussed the serious situation in Jerusalem ... especially the concerns over the al-Aqsa mosque," said one official source.
Al-Aqsa mosque is the third holiest site in Islam and a traditional political flashpoint. The Palestinian intifada, or uprising, erupted 33 months ago following a controversial visit there by then-opposition leader Ariel Sharon.
Non-Muslims were then barred from the site.