"PM Netanyahu has ordered to reinforce police presence in Jerusalem after a Palestinian terrorist ran over eight people this evening, killing a baby," spokesman Ofir Gendelman wrote on his Twitter account.
During the incident, which took place shortly before 6:00 pm (1500 GMT), a car driven by a Palestinian from east Jerusalem ploughed into a group of pedestrians walking near the Ammunition Hill tram stop, which lies on the seamline between west and occupied east Jerusalem.
Gendelman said the driver, who was identified by police as a 21-year-old Palestinian from the flashpoint neighbourhood of Silwan in east Jerusalem, was a member of Hamas.
Netanyahu lashed out at Palestinian president Mahmud Abbas, whose Fatah movement signed a reconciliation agreement with Hamas earlier this year, which saw the two factions agreeing on a government of national consensus.
"This is how Abu Mazen's partners in government act, the same Abu Mazen who - only a few days ago - incited toward a terrorist attack in Jerusalem," Netanyahu said, using the Palestinian leader's nickname.