Suspected Jewish extremists punctured the tyres of more than 20 Palestinian cars in east Jerusalem on Monday in the latest apparent "price tag" hate crime, police and an AFP correspondent said.

The attack took place in Beit Hanina neighbourhood, with Hebrew graffiti on a nearby wall reading: "We won't be silent on stone throwing."

Police said 21 cars had been vandalised and that they had opened an investigation.

"Price tag" is the euphemism for extremist hate crimes that generally target Arabs.

Initially carried out against Palestinians in retaliation for state moves to dismantle unauthorised settler outposts, the attacks have since become a much broader phenomenon with racist and xenophobic overtones.

Prime Minister Benjamin Netanyahu on Monday condemned the incident and pledged robust action against such attacks, saying: "We cannot accept the undoing of law within our midst."

Last week 28 cars were vandalised in the Arab-Israeli village of Abu Ghosh near Jerusalem in an attack that evoked strong condemnation from the Israeli political establishment.

On Monday, President Shimon Peres went to the village in a show of solidarity, describing the attack as "ugly terror" that could not be tolerated.

Also this month, graves were desecrated in an Arab Christian cemetery in Jaffa.

Last week, Israeli ministers moved to increase the powers of the security establishment to crack down on the phenomenon by declaring that those involved belonged to an "illegal organisation."

But they stopped short of declaring such incidents "acts of terror."

In 2012, police opened 623 files on price tag attacks, arrested 200 people and served 123 indictments, an official said earlier this month.

So far this year, they have opened 165 files on attacks, arrested 76 suspects and served 31 indictments, with police insisting that such crimes are a "top priority."