The timing of this shield's deployment will be a vital factor influencing any Israeli decision to attack Iran's nuclear facilities.
Iran could retaliate for a strike by using its key ally, Hizbollah, to fire missiles into Israel.
With Iran's help, Hizbollah is believed to have amassed about 30,000 rockets in southern Lebanon, including the Zelzal missile which could strike as far south as Tel Aviv.
Israeli officials believe these weapons are being held in reserve to aid Iran in the event of war. They say that Hizbollah has trebled its arsenal in the last two years and may now possess advanced weapons including C802 anti-shipping missiles. Israel believes these rockets have been smuggled from Iran to Lebanon via Syrian territory.
Facing this threat on its northern border, Israel will probably want to perfect its missile defences before considering a strike on Iran. Two systems are now being developed: the Iron Dome which protects against short range rockets and the Magic Wand which shields against missiles with longer ranges.
Israel already as the Arrow and Patriot systems which are designed to shoot down ballistic missiles. This "multi layer" shield is expected to become fully operational in 2010.
Until then, Israel may prefer to avoid striking Iran. "We are now implementing a full scale project to develop anti-rocket interception systems," said an Israeli military official.
He added that when this shield is operational, it will offer protection against every variety of rocket presently deployed by Hizbollah and Hamas. Until a recent ceasefire, militants in Gaza bombarded nearby towns in southern Israel, notably Sderot, with rockets almost every day.
