Occupied Jerusalem: The family of a Palestinian shot dead after his car ploughed into pedestrians in occupied Jerusalem on Tuesday challenged Israeli police allegations that he had carried out a deliberate attack.

More than a dozen soldiers, on a late-night excursion to occupied Jerusalem ahead of the Jewish New Year next week, were injured in Monday's incident. No Palestinian group has made a credible claim of responsibility.

Police called it a "terrorist" attack, the third of its kind using vehicles against Israelis in the city since July and involving Palestinians from occupied East Jerusalem and its environs who live on Israeli-annexed land and have wide freedom of movement.

Police identified the driver of the black BMW as Qassem Mughrabi, 19, of Jabal Mukhabar, a village in the occupied West Bank.

Mahmoud Mughrabi, 49, his father, said his son did not have a driving licence and apparently lost control of the car.

"My son was murdered, they killed him. He did not carry out a terrorist attack. This was a car accident," Mughrabi, owner of a trucking business, said.

Shmuel Ben-Ruby, a police spokesman, said the incident was still being treated as an intentional attack and information suggested disappointment over a failed romance might have been the motive.