JERUSALEM - A homegrown Israeli missile defence system performed well in its first live trial, bringing down a short-range rocket similar to those used by Palestinian and Lebanese militants, an Israeli Defence Minister official said Wednesday.

Spokesman Shlomo Dror told The Associated Press that a missile from the "Iron Dome" system intercepted and destroyed a Grad rocket. He did not say when or exactly where the system was tested, but the Web site of local daily Yediot Ahronot said the trials were held during the past week.

Dror said that while the missile's guidance and control systems have been tested several times in the past, this was the first trial under live battle conditions.

The laser-based system is scheduled to be fully-operational by the end of next year.

Palestinians in the Gaza Strip fired dozens of Grads, and hundreds of smaller homemade rockets, into southern Israel during a three-week Israeli offensive last winter. Dror said Iron Dome was equally effective against both types of rockets.

The Grad is also similar to the Katyusha rockets used by the Lebanese Hezbollah militia, which fired almost 4,000 of them across Israel's northern border during fierce fighting in 2006.

Israel has been looking at anti-rocket systems since 2003 but put the search into high gear after the summer 2006 war.

Developed at a cost of over $200 million, the Iron Dome system is intended to eventually be integrated into a multilayered defence umbrella to meet all missile threats.

Its manufacturer, state-owned Rafael is also working with U.S. company Raytheon Co. to develop a system against medium-range missiles.

To meet long-range threats, such as an Iranian attack, Israel Aerospace Industries Ltd. and Chicago-based Boeing Co. are producing the Arrow missile, which has been successfully tested and partially deployed.

The most advanced version, the Arrow II, was specifically designed to counter Iran's Shahab ballistic missile, which is capable of carrying a nuclear warhead.

The Shahab-3 has a range of up to 1,250 miles (2,000 kilometres), putting Israel well within striking distance.

Israel sees Iran as its biggest threat, citing the country's nuclear program and its development of long-range ballistic missiles. Those fears have been compounded by Iranian President Mahmoud Ahmadinejad's repeated references to the destruction of the Jewish state.