"Two terrorists entered the synagogue in the neighbourhood of Har Nof. They attacked with an axe, a knife and a gun. Four worshippers were killed. The police who arrived at the scene shot and killed the two terrorists," Israel Police spokesperson Luba Samri, said.

All the four victims of the deadly attack were Israelis with dual nationality, three of whom were Americans and a fourth British, Israeli police said.

"Regarding citizenship, there were three Americans and the fourth was British," Samri said.

The attack began shortly before 7 am (local time) as worshippers were attending prayers at a synagogue in a Jewish seminary in the Har Nof neighbourhood.

At least eight people were wounded in the attack, including two police personnel. The injured were taken to Shaare Zedek Medical Center and Hadassah Ein Kerem. Four of them are in a serious condition.

"I tried to escape. The man with the knife approached me. There was a chair and table between us. My prayer shawl got caught. I left it there and escaped," Yossi, who was praying at the synagogue at the time of the attack, told Channel 2 TV.

Images from the aftermath of the brutal attack showed prayer shawls lying on the floor in pools of blood.

"This is an area with a number of rooms," rescue services spokesman Zaki Heller said.

"The wounded were scattered throughout different rooms and the paramedics who arrived at the scene dispersed to deliver first aid. The wounded were quickly evacuated by ambulance to hospital," Heller said.

Netanyahu described the attack as a "cruel murder of Jews who came to pray and were killed by despicable murderers".

The Israeli Premier said the attack was the result of incitement by Hamas militants and Palestinian President Mahmoud Abbas, which the world had ignored.

Netanyahu also ordered the demolition of homes of Palestinians involved in other recent deadly attacks.

Palestinian sources named the attackers as Rassan and Uday Abu-Jamal, relatives from the Jabel Mukaber neighbourhood of East Jerusalem.

Obama strongly condemned the horrific attack, saying, "There is and can be no justification for such attacks against innocent civilians."

Obama identified the three Israeli-Americans who died in the as Aryeh Kupinsky, Cary William Levine and Mosheh Twersky.

"We are at the height of an ongoing terror attack focused on Jerusalem," Netanyahu said just hours after the attack at the Jerusalem synagogue.

He warned Israelis against taking the law into their own hands by carrying out revenge attacks.

"This evening, I ordered the destruction of the houses of the Palestinians who carried out this massacre and to speed up the demolition of those who carried out previous attacks," he said.

"Citizen of Israel, I call on you to demonstrate great vigilance and to respect the law because the state will bring to justice all the terrorists and those who dispatch them," he said.

"It is forbidden for anyone to take the law into their own hands, even if tempers are high and even if you're burning with anger," he added.

The Israeli Premier said, "Hamas, the Islamic Movement and the Palestinian Authority are spreading no end of libels... against the state of Israel."

"They say that the Jews are defiling the Temple Mount, they say that we are planning to destroy the holy places there, that we are intending to change the prayer rites there. It's all a lie. And these lies have already cost a very high price," he said.

Islamist Hamas, which rules the Gaza Strip, said that the attack was a response to the "the ongoing Israeli crimes at al-Aqsa (mosque) calling upon supporters to continue acts of revenge".

An official Hamas statement also said that the attack was a response to the death of bus driver Yusuf Hassan al-Ramouni, who was found hanged at a Jerusalem bus terminal on Sunday.

While al-Ramouni's family claimed foul play, autopsy reports suggested suicide.

Tensions in Jerusalem appeared to have subdued following a meeting in Amman between Netanyahu, US Secretary of State Kerry and Jordan's King Abdullah II, but proved otherwise following the gruesome murders on Tuesday.

The meeting was an attempt to restore calm after months of violent confrontations surrounding the Temple Mount, holy to both Jews and Muslims.

Israel and the Palestinian Authority had both said they would take steps to reduce tensions and prevent an escalation.

Netanyahu said last week that Israel had no intention of changing the status quo on the Temple Mount, where a Muslim trust enforces the ban on Jewish prayer at the site.

Latest News from World News Desk