The Arrow 3 is part of a multilayered system that Israel is developing to protect against a range of missile threats, from short-range rockets in the Gaza Strip and Lebanon to medium and longer-range missiles in the hands of Syria and Iran. The Arrow system is being developed to protect against sophisticated Iranian-made Shahab ballistic missiles.

Israel's Defense Ministry said it was the first flight test of the Arrow 3 interceptor. It was conducted at an Israeli test range over the Mediterranean Sea. The system is about three years away from becoming operational.

"The Arrow 3 interceptor was successfully launched and flew an exo-atmospheric trajectory through space, in accordance with the test plan," it said in a statement. "The successful test is a major milestone in the development of the Arrow 3 weapon system and provides further confidence in future Israeli defense capabilities to defeat the developing ballistic missile threat."

Iran's Shahab ballistic missile can carry a nuclear warhead and has a range of 2,000 kilometers (1,250 miles), putting Israel and parts of Europe within range. With Iran suspected by the international community of trying to develop a nuclear weapon, the success of the Arrow is considered critical for Israel.

Israel considers a nuclear-armed Iran to be an existential threat, citing Iranian calls for Israel's destruction, its support for anti-Israel militant groups and its missile and nuclear technology. Tehran says its nuclear program is peaceful, a claim that Israel and many Western countries reject.

Prime Minister Benjamin Netanyahu said the test shows Israel's technological capabilities as well as its close cooperation with the U.S. "Israel's hand is always extended for peace, but we are always prepared for other options as well," Netanyahu said after a meeting with Mideast envoy Tony Blair Monday afternoon.

A senior Defense Ministry official said the test was conducted "100 percent successfully."

"This is the first time the interceptor with all of its equipment took off and flew, achieved its velocity and did the maneuver in space," he said, speaking on condition of anonymity under ministry regulations. "The Iranian missiles are a main factor to why this system was developed," he said, but he stressed that the test was not connected to a specific regional development.

The Arrow 3 is being developed by state-run Israel Aerospace Industries in conjunction with American aviation giant Boeing Co.

The Arrow 3, expected to be operational around 2016, would give Israel an additional layer of defense by targeting incoming missiles far closer to their time of launch. The Arrow 2 system, which intercepts targets inside the atmosphere, is already operational.

Last year, Israel also successfully tested a system designed to intercept missiles with ranges of up to 300 kilometers (180 miles). That system, called "David's Sling" and "Magic Wand," is expected to be operational next year.

Israel has also developed a system for intercepting short-range rockets. The "Iron Dome" successfully shot down hundreds of rockets fired from the Gaza Strip during eight days of fighting in November.