Two Palestinian gunmen killed three people and wounded seven this evening in an attack at a popular shopping and dining area near Israel's Defence Ministry in Tel Aviv, police said.

Both of the gunmen who opened fire outside the open-air Sarona shopping complex were apprehended, and one of them was wounded, Israeli police said. Hospital officials said four of the seven people wounded were in critical condition.

People caught up in the evening assault, one of the most serious in Israel's business and entertainment capital since a wave of Palestinian violence began eight months ago, ran for their lives as shots rang out.

Police said they had no advance intelligence of any plan to strike in Tel Aviv. The frequency of Palestinian street attacks in Israel, which have included stabbings, shootings and the ramming of cars into pedestrians, has slowed significantly in the past several months, although tension has remained high.

"I was with the family, eating pizza. We heard the shots, we didn't know what was happening, and everybody got down on the floor. We managed to escape to a cellar," a woman, who gave her name only as Annette, told Israel's Channel 10 television.

Police said the gunmen came from a village near the Palestinian city of Hebron in the Israeli-occupied West Bank. Channel 10 reported the two were cousins, in their 20s, and that they had been eating at one of the restaurants when they pulled out their guns and began firing. Security guards shot back.

Prime Minister Benjamin Netanyahu, returning from a visit to Moscow, convened consultations with security officials at the Defence Ministry in Tel Aviv after the attack.

In the last half year, Palestinian attacks have killed 31 Israelis and two visiting U.S. citizens. Israeli forces have shot dead at least 196 Palestinians, 134 of whom Israel has said were assailants. Others were killed in clashes and protests.