Fire broke out on Sunday in the home of a key witness to an arson attack by Jewish extremists that killed a Palestinian family last year but he survived, police and residents said.

The home of Ibrahim Dawabsheh is located in Duma in the occupied West Bank, the same village where a July firebombing killed an 18-month-old Palestinian boy and his parents.

Israeli authorities were investigating the cause of the fire.

Dawabsheh and his wife were awakened overnight by thick smoke, residents said. Dawabsheh, a relative of the family killed in the July attack, was hospitalised for smoke inhalation, police said.

Residents reported that a window was broken in the house, raising suspicions that Molotov cocktails were thrown inside - as occurred in the July firebombing.

Those details had not been confirmed by the Israeli authorities.

"All leads will be investigated," Israeli police said.

The July 31 attack on a family home in the village killed 18-month-old Ali Saad Dawabsheh and fatally wounded his parents.

Five-year-old Ahmed was the sole survivor from the immediate family.

After spending months in hospital, he was flown to Spain last week to meet Real Madrid stars, including his hero Cristiano Ronaldo.

In January, a court charged two Israelis over the firebombing after slow progress in the case led to criticism from human rights groups and Palestinians.

The attack sparked global condemnation and drew renewed attention to Jewish extremism, including accusations Israel had not done enough to prevent such violence.