The Israeli cabinet is discussing a new policy to label the so-called 'price tag' attacks led by Jewish settlers as terrorist attacks, according to local media.

Justice minister Tzipi Livni and internal security minister Yitzhak Aharonovich confirmed that they plan to increase funds and tools available to police and Shin Bet, Israel's internal intelligence service, against a growing number of attacks on non-Jewish targets by Jewish people.

After a meeting with attorney general Yehuda Weinstein and representatives from the IDF and Shin Bet, Livni and Aharonovich said that they "see eye to eye on the need for more serious steps to be taken, including making sure law enforcement have the tools at hand to deal with the criminals responsible."

They called price tag attacks a grave matter that "threatens to undermine relations with Israeli Arabs".

In the budget passed by the Cabinet earlier in the week, Aharonovich managed to secure funds for an additional 50 police officers to specifically fight nationalist crime, including the price tag attacks.

Price tag is a term used by Jewish settlers to describe attacks - usually carried out against Palestinians but also targeting Christian churches and Israeli Arabs - in retribution or punishment for the Israeli government's actions perceived as anti-settler.

The attack aims at exacting "a price" for government actions, such as demolishing settlements.

In the latest attack, Jewish settlers torched three cars and defaced a mosque in a Wadi Ara village. Anti-Arab graffiti and labels such as a Star of David and the words "tag mehir" (price tag) were found on the wall of the mosque.

Last December, clashes between Muslim worshippers and Jewish settlers erupted after a group of price tag settlers broke into the Al-Aqsa mosque in Jerusalem.

Police spokeswoman Luba Samri said that graffiti insulting Jesus Christ was sprayed on the gates of the entrance of the cemetery and in and around the monastery. "Jesus is a bastard" "price-tag" and "Happy Hanukkah", the Jewish holiday, were painted on a car.