Members of the first known Islamic State cell operating inside Israel has been arrested, the country's Shin Bet security service said.

The intelligence agency said today that the seven cell members belong to the country's Arab minority.

It said they were caught just before executing an attack and were practising on animals how to behead people.

It said the seven admitted to belonging to the extremist group, which controls about a third of Iraq and Syria, where it has beheaded scores of captive soldiers as well as Western journalists and aid workers.

Thousands of Muslims from Western countries are believed to have flocked to Syria to join the Islamic State. The Shin Bet estimates that around 30 Arab Israelis have joined the group in Syria.