Israeli-Palestinian peace talks slated for Monday were scrapped after three Palestinians were shot dead in the West Bank, a Palestinian official said, although the US sponsors of the process denied the report.

"The meeting that was to take place in Jericho ... today was cancelled because of the Israeli crime committed in Qalandiya," he told AFP, referring to a West Bank camp where the three were shot dead in clashes with Israeli troops.

But the US State Department, which is mediating the talks, insisted that no meeting planned as part of the ongoing peace process had been cancelled.

"I can assure you that no meeting has been cancelled," State Department spokeswoman Marie Harf told reporters in Washington.

The Palestinian official, who declined to be named, did not set a new date for talks, while Harf refused to say whether or not any meeting had actually taken place.

"As we have said the parties are engaged in serious and sustained negotiations," Harf said.

"We are not going to announce when every meeting takes place. But again I can assure you that no meeting has been cancelled."

On the ground, medics said that three Palestinians were shot dead and 19 wounded by Israeli security forces in the Qalandiya refugee camp early on Monday.

"What happened today in Qalandiya shows the real intentions of the Israeli government," said Nabil Abu Rudeina, spokesman for the Palestinian president.

He called on the US administration to "take serious and quick steps" to prevent the collapse of peace efforts.

Medics said two of the Palestinians were shot in the chest and one died of brain damage.

The United Nations agency for Palestinian refugees, UNRWA, said one of its employees was among the three men killed.

The father of four was "killed on his way to work and was not taking part in any violent activities," it said in a statement.

"UNRWA condemns the killing of its employee and calls for the two sides in this delicate period to exercise maximum restraint and to abide by international laws," it said.

Hospital officials said all the casualties were hit by live ammunition.

An Israeli police spokeswoman said border police used "riot dispersal means" against a crowd of 1,500 people who threw stones and petrol bombs to protest the arrest of a suspect.

"In the early hours of the morning, a border police team went into Qalandiya camp to arrest a hostile terrorist activist," spokeswoman Luba Samri told AFP.

"After his arrest a mob of about 1,500 residents began a disturbance, throwing petrol bombs and stones, endangering the lives of force members, who responded with riot dispersal means," she said.

An army spokeswoman said troops were later sent in to extricate the border police.

"An army force was called to help them," she told AFP. "They were obliged to use live fire to protect themselves."

The peace talks formally resumed this month after a hiatus of nearly three years, thanks to an intense bout of shuttle diplomacy by US Secretary of State John Kerry.

At the weekend, Palestinian sources said they expected a new round of talks to be held Monday in Jericho on the West Bank but there was no official confirmation in line with a US-imposed news blackout.

Egypt's Foreign Minister Nabil Fahmy, on a visit to Palestinian president Mahmud Abbas's headquarters in the West Bank town of Ramallah, condemned the deaths.

The talks have been overshadowed by Israeli plans to build more than 2,000 new homes for Jewish settlers on occupied Palestinian territory.

On Sunday, Jerusalem city council's finance committee approved a budget of $17.3 million for infrastructure work at the site of the planned new east Jerusalem settlement of Ramat Shlomo.

The site hit the headlines in March 2010, when Israel sparked the ire of the US administration by announcing, during a visit by Vice President Joe Biden, that 1,600 new homes would be built there.

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