A right-wing activist has been arrested as police launched an investigation into Jewish ultra Orthodox extremists following a firebombing in which a Palestinian baby girl was killed.

Israeli domestic intelligence service Shin Bet named the man arrested in Safed, northern Israel, as Meir Ettinger. A spokesman said he was arrested because of his involvement "a Jewish extremist organisation."

Ettinger is the grandson of notorious rabbi Meir Kahane, founder of the anti-Arab Kach party, who was assassinated in 1990 in New York. Ettinger is believed to lead the group responsible for an arson attack on the Church of the Multiplication of the Loaves and Fish in northern Israel in June.

Police said they suspected Ettinger, 24, committed nationalist crimes. He is not believed to be involved in the firebombing attack in which 18-month-old Ali Saad Dawabsha was killed in Duma, near Nablus on 31 July. Israeli Prime Minister Benjamin Netanyahu described the incident as a "terror attack".

Ettinger is due to appear in court on 4 August for a custodial hearing.

Intelligence agencies believe extremist settlers seeking to topple the Israeli government and replace it with a regime that espouses Jewish religious law are responsible for the Duma attack. The extremist groups reportedly advocate action that goes beyond the "price tag" attacks that sought to extract a price for every attempt to curtail the settler movement.

In the wake of the Duma attack, an Israeli extremist launched a knife attack on a gay pride parade in Jerusalem in which a 16-year-old girl was killed. Three people were injured in a firebomb attack on a car in Jerusalem on Monday night (3 August).