The Skyshield system, which was developed by US company Lockheed Martin Corp and a Swiss firm, shoots shrapnel that knocks the target down or off course, Channel Two TV said.

Skyshield has shot down 80% of its targets in tests, the TV said.

Israel hopes the system can help protect against homemade Palestinian rockets, which are frequently shot from the Gaza Strip. The rockets are notoriously inaccurate and rarely cause any damage, but have been fatal in some cases.

The TV did not give the name of the Swiss company but a representative of the Zurich company Oerlikon Contraves AG said that the firm produces Skyshield. He did not know whether the company is in talks with Israel.

A message left at Lockheed Martin's headquarters in Bethesda, Maryland, was not immediately returned.

Israel currently uses an early warning system that alerts civilians moments before the rockets land. It also is developing a laser rocket-defence system with the US, but officials say the system won't be ready until 2007 at the earliest.

Israel withdrew from the Gaza Strip in September.