"The Ministry of Defence has signed a major deal worth approximately 2 billion shekels to significantly expand procurement of the laser interception systems, 'Iron Beam,'," a statement said.

The system is aimed at improving the interception of drones and other projectiles, which Hezbollah in Lebanon has fired at Israel since the start of the war in Gaza in support of its Palestinian ally Hamas.

Iron Beam would supplement other aerial defence capacities such as the more well-known Iron Dome.

These have been unable to intercept every projectile launched by the Lebanese armed group, resulting in both civilian and military casualties.

The defence ministry will work with defence companies Rafael and Elbit, the statement said.

It quoted ministry director general Eyal Zamir as saying he hoped the new system would "enter operational service within a year".

Rafael Advanced Defense Systems is Israel's national defence research and development arm.

Defence company Elbit said in a separate statement the ministry granted it a contract worth about $200 million specifically to develop Iron Beam.

Israel announced in late September it had received a new US military aid package worth $8.7 billion, at a time when it is at war with both Hamas in Gaza and Hezbollah in Lebanon.

The ministry said $5.2 billion of that was designated for air defence systems, including "supporting the continued development of an advanced high-powered laser defence system currently in its later stages of development".

After a test in 2021, the defence ministry published a video showing a laser system on a small aircraft fire an energy beam at a drone, apparently burning a hole and setting it ablaze.

Israel's current air defence features a multi-layered shield that helped to intercept a large number of around 200 missiles launched by Iran on October 1.

Iron Dome offers short-range protection against missiles and rockets, such as projectiles fired from Gaza and Lebanon.

David's Sling and successive generations of Arrow missiles are Israeli-American technology paid for with US aid and built to bring down ballistic missiles.

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ELBIT SYSTEMS