Israeli authorities said on Tuesday they had arrested a suspect in twin bombings that killed two people at bus stops in Jerusalem last month, charging that he identified with the Islamic State group.

The Shin Bet domestic security agency and Israel Police said in a joint statement that Aslam Farouh, 26, an Arab with an Israeli residency card, lived between Kufr Akab, a neighbourhood of Jerusalem, and Ramallah.

"The suspect acted on his salafi-jihadi ideology, identifying with the Daesh organisation and acting alone after a long period of preparation in order to target Israeli citizens in Jerusalem," the statement added, using another term for IS.

A Carlo makeshift submachine gun and an explosive device were found in Farouh's possession, the statement said, adding that he would be indicted "in the coming days".

An Israeli-Canadian teenager and an Israeli aged in his fifties were killed and 13 others wounded in the first bombings to hit the contested city since 2016.

The attacks came amid a surge in violence in Israel and the Palestinian territories.

At least 150 Palestinians and 26 Israelis have been killed this year across Israel, the occupied West Bank and Israeli-annexed east Jerusalem.

A further 49 Palestinians died during three days of fighting between Gaza Strip militants and Israel in August.

According to United Nations data, 2022 has been the deadliest year since the 2002-2005 Palestinian uprising, known as the Second Intifada. (AFP)