Israeli Ynet news said that the buses, owned by the company Afikim, were found burning in the village of Kafr Qassem.

According to reports, nobody was injured while drivers from the Israeli company were asked to remove all buses from the Palestinian-Israeli town following the incident, Ynet reported.

The incident comes a day after the Ministry of Transport launched two Palestinians-only lines in the occupied West Bank a step in which rights groups condemned and described as racist.

“Creating separate bus lines for Israeli Jews and Palestinians is a revolting plan,” Jessica Montell, director of the B’Tselem rights group, said on Army Radio.

“This is simply racism.”

However, the Israeli Transport Ministry said the two new lines would “improve public transport services for Palestinian workers”.

Haaretz daily newspaper reported the ministry opened the lines after Jewish settlers complained of having Palestinians on regular buses.

Meanwhile, earlier this month a UN human rights inquiry called on Israel to remove all Jewish settlers from the West Bank and cease settlement activities.

The report said the settlements violate international law, and are an attempt to drive out Palestinians through intimidation.

Israel reacted strongly to the report saying it was biased.

The 1949 Geneva Convention prohibits the transfer of a civilian population into an occupied area as such an act could constitute war crimes if brought before the International Criminal Court (ICC).