The Israeli army said his death during a late-night security operation in the village of Jiljilya, north of Ramallah, on January 12 was a result of "moral failure and poor decision-making".

The Palestinian Authority welcomed the investigation into the circumstances surrounding the death last month of 78-year-old Omar Assad, but called on Israel to probe all Palestinian deaths at the hands of Israeli troops, not just those involving US passport holders.

In Washington, the State Department noted the Israeli military's report and conclusions on the incident, but called for further investigation.

"We continue to be deeply concerned by the circumstances of the death of Mr. Omar Assad," said spokesman Ned Price.

"The United States expects a thorough criminal investigation and full accountability in this case," Price said in a statement.

"We continue to discuss this troubling incident with the Israeli government," he said.

- 'Careless act' -

The army said Assad had no identification and "refused to cooperate" when he was stopped by troops. Soldiers tied his hands and gagged him and took him to a nearby building with three other detainees.

When troops released the detainees, they thought Assad was "asleep" and left him where he was, the army said.

A post-mortem found he died of a "stress-induced heart attack caused by the circumstances of his detention by Israeli soldiers," the Palestinians' official news agency Wafa reported.

"The investigation concluded that the incident was a grave and unfortunate event, resulting from a moral failure and poor decision-making on the part of the soldiers," the army said in a statement.

Armed forces chief of staff Lieutenant General Aviv Kochavi said: "Leaving Mr. Assad alone and without checking his condition was a careless act that runs contrary to the values of the Israel Defence Force, at the centre of which is the requirement to protect the sanctity of any human life."

The troops were part of the Netzah Yehuda Battalion of religious Jews.

- 'Faintest of rebukes' -

The investigation was carried out by the head of Central Command, which oversees operations in the West Bank.

As a result of the probe, the battalion commander will be reprimanded, while the platoon and company commanders will be stripped of their commands, but not their ranks, and will "not serve in commanding roles for two years."

The army said the military police are conducting a separate investigation into the case that could lead to criminal charges.

Palestinian Authority spokesman Ibrahim Melhem told AFP he welcomed the investigation but wanted to see broader accountability for Israeli actions.

"Israel makes this investigation because the martyr holds a US passport," Melhem charged.

"There are many more martyrs like Omar killed by the Israeli army but, because they hold only Palestinian identities, no one cares about them."

Israeli human rights group Btselem said Assad was 78 at the time of his detention and accused the army of issuing "the faintest of rebukes" to its officers over his death.

"The fundamental moral failure is that of Israel's senior echelons, leading a regime of Jewish supremacy, one in which the human life of Palestinians has no value," the group said in a statement.

It said it had recorded 77 Palestinian deaths at the hands of Israeli security forces in the West Bank last year. More than half of those killed were not implicated in any attacks, it added.