By Jonathan Marcus BBC defence correspondent

It has achieved impressive results in tests, including the latest on 5 January against multiple simulated targets.

Developed with considerable US money, the system comprises:

• Missiles
• Launcher
• Green Pine radar to identify targets
• Citron Tree Battle Management System.

Israel is thought to have two operational Arrow batteries: one at the testing site on the coast at the Palmachim base, south of Tel Aviv; the other covering the central part of the country to the east of the town of Hadera.

Priority

Approval has been given to build a third battery.

Each battery reportedly costs some $170m.

Ranges of the Arrow II system

Missile defence is a high priority for Israel which came under attack from Iraqi Scud missiles during the 1991 Gulf War.

Those were equipped with ordinary high-explosive warheads and proved to be highly inaccurate.

But Israeli military planners are well aware of the spread of missiles and weapons of mass destruction in their region.

The results of even a single missile impact with a chemical or biological warhead could be severe.

Israel's population centres are concentrated making its civilian infrastructure highly vulnerable.

US troops deployed

In 1991 Israel was protected by US Patriot missiles batteries though there is little evidence that the Patriots actually destroyed any incoming Scud missiles.

The Arrow has not yet been tested in combat

In fairness, the original Patriot was essentially an anti-aircraft system with only a basic anti-missile capability.

Newer versions of the Patriot are said to have much-improved software enabling them to engage incoming missiles.

Indeed the latest PAC-3 version also has a new "hit-to-kill" warhead rather than the original fragmentation warhead that was designed to explode in the vicinity of the target.

Israel now has Patriot missiles of its own. And several hundred US troops with additional batteries are on exercise in Israel.

The idea is to see how the Arrow, the Patriot and their associated radars can be integrated into a nationwide defensive system. The US deployment is also intended to reassure Israel.

State of alert

There are fears that if Iraq does have a small number of Scud missiles it might try to fire them at Israel in the event of a US attack.

Just as last time around, Washington wants to keep Israel firmly on the sidelines.

The early stages of any war are likely to see US and allied special forces inserted into western Iraq to try to control the so-called "Scud-boxes" or known firing areas.

Israel's defences are at a high state of alert. The Arrow is so far untested in real combat.

And whatever the claims made for its performance, most Israelis will probably hope that their country's defensive Arrow will not be needed if a new Gulf war comes.