JERUSALEM // A West Bank mosque was vandalised yesterday in what Israeli police linked to a campaign of violence by ultranationalist Jews who target both Palestinians and Israelis. Palestinian villagers in Dir Istiyya awoke to find the words "price tag" and "Gal Arye Yossef" tagged on their local mosque and three cars burnt out, said Mickey Rosenfeld, a police spokesman. The graffiti indicated the incident was a so-called price-tag attack, which are carried out in revenge for Israeli demolitions of unauthorised settler outposts in the West Bank. Such attacks have been carried out in the past few years by Jewish extremists against Palestinian communities and, more recently, Israel's military. Gal Arye Yossef is the name of an outpost demolished by the military on Sunday. Israel's defence minister, Ehud Barak, said the attack was "designed to damage the fragile relationship between Israelis and Palestinians in" the West Bank. Last Wednesday, two vehicles were set on fire in what police described as "price tag" attacks in a Palestinian car wash in the east Jerusalem village of Sharafat. Price-tag violence has alarmed Israelis because one of the country's most revered institutions, the military, has increasingly become a target. There were approximately 228 attacks by Israelis against the military in the West Bank last year, police officials have estimated. Fourteen Israelis had been arrested for taking part in "nationalistic" attacks in the West Bank and Jerusalem since the summer, Mr Rosenfeld said. Four had been charged. The increase in attacks has coincided with a surge in approvals of new settlement structures in east Jerusalem, which Palestinians want as the capital of their hoped-for state. Last year, Israel's government approved the largest number of such structures in the contested city - 3,690 - in over a decade, dwarfing the closest year-end total of 2,653 in 2002, according to a report released by Israel's Peace Now organisation. Construction on settlements in the West Bank rose by 20 per cent last year, which the non-governmental organisation's report, called "Torpedoing the Two-State Solution", warned was diminishing the viability of a separate Palestinian state. "The Netanyahu government is promoting several plans precisely in disputed areas which could prevent the possibility of establishing a Palestinian state alongside Israel," said the report, referring to the Israeli prime minister, Benjamin Netanyahu, and his right-wing, pro-settler coalition. Mark Regev, a spokesman for Mr Netanyahu, yesterday did not dispute the report's findings but argued in a statement that "we have shown more restraint on the issue of settlement than any previous Israeli government". Settlements are considered illegal under international law. Jerusalem's mayor, Nir Barkat, added to the dispute this month when he proposed transferring Palestinian neighbourhoods in East Jerusalem that fall on the far side of the separation barrier to the authority of the Civil Administration, an Israeli-military body governing Palestinians in large parts of the West Bank. The move would likely result in thousands of Palestinians losing their Jerusalem identity cards and, as a result, their ability to access the city. <strong>* With additional reporting by the Associated Press and Agence France-Presse</strong> Follow <strong>The National </strong> on & Hugh Naylor on