Lebanon-based Hezbollah blamed Israel for the car bombing, but it denied any involvement in the attack. 

Sunday's attack took place near the settlement of Masua in the northern part of the Jordan Valley.

Vehicle overturned

Israel's rescue services said that the police vehicle was found upside down on Highway 90 with one officer inside already dead. Efforts to revive the other officer failed.

Al Jazeera's Mike Hanna, reporting from Jerusalem, said that the shooting would mark an escalation in violence in an area that has been relatively quiet for a long period of time.

"There has not been a shooting attack in this particular area by Palestinians since January this year, an incident which has still not been fully resolved," he said.

About 7,000 Jewish settlers live in settlements in the Jordan Valley, which Ehud Olmert, the outgoing Israeli prime minister, has said should remain under Israeli control.

On March 2, the Peace Now group said Israel's housing ministry had plans that would nearly double the number of settlers in the area.