The interceptor flew an exo-atmospheric trajectory in line with the test plan, the statement added.

The upgraded Arrow missile, which is designed to intercept and demolish incoming ballistic missiles equipped with non- conventional warheads high in space, iballistic missiles set to significantly bolster Israel's defense capabilities to counter future threats, mainly Iran's advanced Shahab and Syria's long-range Scuds.

While a target was not intercepted in Monday's test, the defense ministry said its success is "a major milestone in the system's development and provides further confidence in Israel's future capabilities to defeat the developing ballistic missile threat."

Arrow missile is the top tier of Israel's multi-layered active air defense, which aims at providing a comprehensive shield against an array of changing threats -- from crude, short-range rockets fired by Gaza militants to sophisticated and highly- accurate ballistic missiles.

The main upgrade to Arrow III, which is scheduled for deployment in the coming years, is in its interceptor missile: it is lighter and has an extended range and better maneuverability.

The older version has been put through numerous live trials over the years, successfully shooting down an assortment of projectiles, but has not yet been tested in real combat.