"What we have here is a developmental system that is well-along," he told a press conference at the Pentagon.

"There are interceptors in the ground. And at some point soon, it will have a modest capability," he said.

President George W. Bush had promised during his re-election campaign that the system would be declared operational by the end of the month.

The US Missile Defense Agency announced December 15 that the system had failed its first US missile defense flight test in two years.

The interceptor missile shut down instead of blasting off from a launch pad in the Marshall Islands into the path of target missile fired from Alaska, officials said.

Rumsfeld said the system was still "being perfected and improved."

The 11-billion-dollar-a-year missile defense program still has deep support in the Republican controlled Congress, but competition for funds may increase with the rising costs of the war in Iraq.

By some estimates, the Pentagon has already devoted 130 billion dollars to the program, and could still spend another 50 billion dollars on it.

Target missiles have been successfully intercepted in five of eight earlier attempts. However, all tests so far have been highly scripted events and not representative of the challenges of a real missile attack.

The system aims to defend the United States against a missile attack by a hostile nations such as North Korea.