JERUSALEM - A woman injured by a Palestinian man ramming his car into a Jerusalem light railway stop in what police called a terrorist attack, died of her injuries on Sunday, raising the death toll in the incident to two people, police said.

The fatality has put a spotlight on a spike in violence in the city at the heart of the Israeli, Palestinian dispute, where police have confronted stone-throwing protesters in Palestinian neighbourhoods on a daily basis in the past few weeks.

Police spokeswoman Luba Samri said a tourist from Ecuador, 22, had died of her injuries after a Palestinian driver rammed a car into the station on Wednesday. A three-month-old baby, who was a U.S. citizen, was also killed.

The driver, Abdel-Rahman Shaloudi, 21, was killed when police shot him after he got out of the car and tried to flee. Seven other people were injured in the incident.

Shaloudi's hometown, the East Jerusalem neighbourhood of Silwan next to the old walled city, has been a scene of confrontations since the incident, which his family has said was a traffic accident.

Police confronted dozens of protesters throwing stones and firebombs in Silwan again on Sunday ahead of a funeral planned for Shaloudi for which Israeli authorities have sought to limit attendance to try and reduce tensions.

Tensions have risen in Silwan since a group of Jewish settlers moved in there last month in the largest purchase of homes in the largely Palestinian-inhabited area by Jews since 1986.

Violence in East Jerusalem preceded the 50-day Gaza war that ended in August.

A Palestinian youth from Jerusalem's Shoafat area was torched to death in June, an attack for which three Jewish men have been charged in an alleged act of revenge for the slayings of three Israeli teens earlier that month.

Israel captured East Jerusalem along with Gaza and the West Bank in the 1967 Six Day War. It annexed the city shortly afterwards as part of its capital in a move never recognised internationally. Palestinians want the city to be capital of a state they seek in occupied territory.