Israel's prime minister on Tuesday hailed a joint anti-missile exercise with US forces, amid continuing high tensions with Iran, amid claims that Hamas now has rockets capable of hitting Tel Aviv.

Benjamin Netanyahu, speaking at an air force base in central Israel, said the two countries are "creating a new path, and the goal is to defend Israel," a statement from the country's military said.

"Overall, the goal is to ensure peace in the region, and maybe even farther from this region. This cooperation has great potential and is very impressive."

The Juniper Cobra 10 exercises, the fifth in a series of joint air defence drills between the allies, began on October 22 and are due to end on Thursday.

Defence Minister Ehud Barak said the exercise "follows a long period of preparation by the (Israeli military) and the Americans.

"We are watching an exercise of unprecedented scale that deals with real challenges that we will have to face in the future and we had better be ready."

And Israeli chief of staff General Gabi Ashkenazi said: "This is a very important exercise dealing with the growing threat to the citizens of the State of Israel from the development of missiles in our region."

Israel considers Iran to be its arch-enemy after repeated statements by President Mahmoud Ahmadinejad that the Holocaust was a "myth" and that the Jewish state is doomed to be "wiped off the map."

Iran has an arsenal of missiles it claims can reach Israel.

Israeli and US commanders refused to describe the scenarios simulated in the exercise, but said they would practise merging different anti-missile systems that defend simultaneously against long-, medium- and short-range missiles.

Israeli media reported that the exercise would probably include the scenario of a combined attack from Iran together with shorter range barrages from Syria and the Lebanese Shiite militant group Hezbollah.

The United States sent batteries of Patriot missiles to Israel during the first Gulf War in 1991, when Saddam Hussein fired dozens of Scud missiles at Israel.

The country's air defences were further tested in 2006, when Hezbollah fired hundreds of rockets at the country from neighbouring Lebanon. And Palestinian militants have also lobbed thousands of improvised rockets from the Gaza Strip.

On Tuesday, military intelligence chief Major General Amos Yadlin said Hamas, which rules Gaza, now has a rocket believed to be Iranian-made that has a range of about 60 kilometres (37 miles).

That would put Israel's major population centres in potential danger.