Calling it a "historic agreement," the ministry said the system jointly developed by Israeli and US companies can intercept ballistic and cruise missiles, aircraft and drones.

The announcement comes after Israel in September signed a $3.5-billion deal -- the biggest ever for the small country's outsized arms sector -- to sell its Arrow 3 hypersonic missile system to Germany.

The long-range Arrow 3 system was also jointly developed and produced by companies in Israel and its top ally the United States, and the sale had to be approved by Washington before it could be finalised.

That deal came as Germany has led a push to bolster NATO's air defences in Europe after the Russian invasion of Ukraine last year, urging allies to buy deterrence systems together.

Newly minted NATO member Finland was also quick to announce plans to buy an Israeli defence system against aircraft, rockets and missiles.

Analysts say the ongoing war in Ukraine is likely to further increase European demand for Israeli arms.