The office of the European Union Representative in Jerusalem has condemned racist remarks by far-right Israeli Minister of Finance Bezalel Smotrich in which he called for the Palestinian town of Huwwara to be “wiped out”.

“The comments made by Smotrich are unacceptable. They incite to indiscriminate violence in a situation which is already extremely tense,” said the EU in a press statement.

The EU expressed its “great concerns regarding the spiralling violence on the ground. Immediate measures of de-escalation were necessary.”

The statement added, “The comments of Mr Smotrich go in the opposite direction and are unacceptable and intolerable.”

“We call on the Israeli government to disavow those comments and to work together with all the parties involved to defuse tensions.”

Earlier on Wednesday, Smotrich, who in addition to being finance minister is responsible for Israel's civil administration in the occupied West Bank, said Israel should "wipe out" the Palestinian village of Huwwara in the wake of a violent rampage by settlers on Sunday.

"The Palestinian village of Huwwara should be wiped out. The state needs to do it and not private citizens," he said.

In an Israeli rampage on Huwwara and other Palestinian villages on Sunday, at least one Palestinian was killed and nearly 400 were wounded. Israel's police have arrested 10 people for suspected involvement in an anti-occupation attack that led to the death of two Israelis.