About 80,000 people have been told to evacuate their homes as wildfires swept into Israel's third largest city of Haifa.
The fires follow a two-month drought and are being fanned by strong winds in the north of the city.
Wildfires are also threatening homes near Jerusalem and in the West Bank.
Israel's police chief said arson was suspected in some cases and PM Benjamin Netanyahu said any such attacks would amount to "terror".
"Every fire that was the result of arson or incitement to arson is terror in every way and we'll treat it as such," he was quoted by Haaretz newspaper as saying.
"Anyone who tries to burn parts of the state of Israel will be severely punished."
Police chief Roni Alsheich said that if fires had been started deliberately it was "safe to assume... it is politically-motivated''.
Education Minister Naftali Bennett, leader of the right-wing religious Jewish Home party, also appeared to suggest Arab or Palestinian involvement in the fires, writing on Twitter: "Only those to whom the country does not belong are capable of burning it."
The comments brought an angry reaction from Palestinian President Mahmoud Abbas's Fatah movement, which said Israeli officials were "exploiting the fire" to accuse Palestinians.
"What is burning are our trees and our land of historical Palestine," it said in a statement.
On social media, the Arabic-language hashtag #Israel_on_fire began trending, with most tweets expressing pleasure over the outbreak.
Public Security Minister Gilad Erdan told Channel 10 TV news that eight people had been arrested.
He said arson was suspected in about half of the fires and police had found "flammable materials and liquids poured in certain areas".
"We need to be prepared for a new type of terror," he added.
Israeli media reported that the Shin Bet internal security agency was involved in the investigation.
Meanwhile, hundreds of military reservists have been called up to help battle the three-day outbreak of fires.
In Haifa, the city council said several neighbourhoods will be without electricity overnight.
People loaded up supermarket trolleys with belongings, while schools, kindergartens, universities and an old people's hospital were evacuated.
More than 130 people have been taken to hospital with minor injuries, mainly from smoke inhalation, but most were later discharged, Haaretz reported.
Two prisons near Haifa have also been evacuated.
Further south, Highway 443 - which links Jerusalem and Tel Aviv, crossing through the West Bank - was closed to morning traffic on Thursday as another blaze reached the city of Modi'in.
Homes and cars were damaged, and 300 students were evacuated from a school in Talmon, an Israel settlement in the occupied West Bank, police said.
Firefighters have been battling fires in several locations since Tuesday and forecasters are warning that the dry conditions and strong winds are likely to continue until early next week.
Several countries - including Cyprus, Russia, Italy, Croatia and Greece - have sent help and equipment, including aircraft, to help tackle the blazes.
Mr Netanyahu said officials were also contacting the US company which operates a huge firefighting plane known as the "Supertanker".
In 2010, 44 people died in a fire on Mount Carmel, just south of Haifa.
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