Israeli troops have set up roadblocks and are searching the area around the settlement of Itamar [AFP]

Israel's army says it is conducting a "manhunt", following the killing of five Israeli settlers in the occupied West Bank.

The attack happened on Friday night in Itamar, in which an Israeli couple and three of their children were stabbed to death, including a baby aged three months.

Three other children managed to escape and raise the alarm, according to the Israeli news site Ynet.

Israeli troops set up roadblocks on Saturday and were searching the area around the settlement of Itamar, near the Palestinian city of Nablus, for any suspects.

They also instructed all residents to stay in their homes during the extensive sweeps.

Al Jazeera's Cal Perry, reporting from Jerusalem, said 20 people have been arrested so far in connection with the attack and that detentions are continuing.

Perry said the Israeli military had dubbed the assault a "terror attack".

"This grouping of settlements is really seen and has a reputation among the Palestinians as housing some of the most staunch settlers; some of the most religious settlers," he said.

"So, really, the fear now among the Palestinians is what kind of backlash this would bring upon them from settlers.

"The IDF [Israeli army], for its part, is carrying out wide, sweeping operations throughout the West Bank, especially around Nablus.

"We understand, from residents there, that at least one village has already been shut down [and] placed under curfew and the city of Nablus is seeing door-to-door searches being carried out by the Israeli army."

About half a million Israelis live in more than 100 settlements constructed since Israel's 1967 occupation of the West Bank and East Jerusalem. The settlements are illegal under international law.

US condemnation

The US called the killings a terrorist attack and urged the Palestinian Authority (PA) to "unequivocally" condemn it.

"There is no possible justification for the killing of parents and children in their home. We call on the Palestinian Authority to unequivocally condemn this terrorist attack," the White House said in a statement.

Binyamin Netanyahu, the Israeli prime minister, said he was "deeply shocked" by the incident and had ordered the large military operation in the West Bank, said Al Jazeera's correspondent in Ramallah.

"This is the despicable murder of an entire, innocent family, parents and their young ones while they slept in their house," Netanyahu said in a statement.

"Israel will not ignore such a contemptible murder and will act aggressively to ensure the security of its civilians and to punish the murderers."

He also called on the PA to help find the attackers. Salam Fayyad, the PA prime minister, said such violence was never justified.

"There should be no doubt over our position regarding violence. We have rejected it totally and we have always condemned it," Fayyad was quoted as saying by the official Palestinian news agency WAFA.

Hamas, which controls the Gaza Strip, said it offered its "full support" to any actions taken against settlers.

However, a senior figure in Hamas' exiled leadership in Syria, Izzat al-Rishq, said: "We had nothing to do with it."

UN complaint

Avigdor Lieberman, Israel's foreign minister, said he would file a complaint with the UN over the attack and that he expected "worldwide condemnation of the satanic murder of an entire family".

Tension between Palestinians and Israeli settlers in the area has been extremely high in recent days.

On Monday, Israeli soldiers fired live rounds at Palestinians after they clashed with Israeli settlers near Nablus.

Ten Palestinians and an Israeli settler were wounded during the violence, according to Palestinian medical sources and a spokesman for the settlers.

A week earlier, police clashed with settlers in the Havat Gilad outpost west of Nablus as officers moved in to remove a caravan, a tent and another half-built illegal structure there.

Source: Al Jazeera and agencies