The first units will be arrayed to counter Qassam and Grad rockets fired from the Gaza Strip by Hamas, which controls the coastal territory between Israel and Egypt, and by its Palestinian allies.
The deployment of Iron Dome, specifically designed to counter this growing threat, is becoming a matter of some urgency.
The Palestinian militants have been extending the range of their missiles of late from the thinly populated desert area in Israel abutting the Gaza Strip that has been their target for almost a decade.
The Grads, versions of the 122mm Soviet-era battlefield rocket, can now reach as far north as the Negev town of Beersheba, near the Dimona nuclear reactor, and the outer fringes of the major urban conurbation around Tel Aviv.
Most of the strategic targets in Israel lie within the country's narrow central zone between Tel Aviv and Jerusalem.
Iron Dome, still under fast-track development by state-run Israel Aerospace Industries, is designed to counter rockets, and 155mm shells, from ranges of 3 miles to 43 miles.
At present, the Israelis have no defense system capable of countering the Iranian-supplied Grads and the Qassams, which are manufactured by Hamas in makeshift factories in the labyrinthine Gaza Strip.
This is a political hot potato because until now every Israeli government of the last decade failed to produce a defensive system capable of countering the increasingly dangerous threat of short-range rockets.
Iron Dome successfully intercepted three Grads during live-fire tests on July 15-16, the first full interception trials for the system and the end of its initial development phase.
Eventually, Iron Dome battalions will be deployed along Israel's northern border with Lebanon to defend against rockets fired by Hezbollah.
These include Grad-type rockets known by the generic name Katyusha, and longer-range Iranian-made Zelzal and Fajr rockets with a range of up to 150 miles and capable of hitting central Israel.
Hezbollah, armed by Iran and Syria, unleashed a non-stop barrage of some 4,000 rockets against Israel during its 34-day war with Israel in July-August 2006.
Israel says Hezbollah currently has re-armed with some 40,000 rockets of various calibers. By comparison, Hamas fired 800 Qassams and Grads during the 22-day Israeli invasion of the Gaza Strip in December-January.
Other systems capable of combating short-range rockets, which many in Israel believe have become a serious military threat, are in the works.
Iron Dome will be supplemented by the David's Sling system currently being developed by Israel's Rafael armaments company and Raytheon of the United States. It successfully intercepted a simulated 122mm Grad on March 23.
Israel's military planners hope to deploy a more advanced system, Rafael's Magic Wand, in 2012-13. This will probably supplant the Iron Dome system.
Magic Wand will employ the Rafael-Raytheon Stunner interceptor, which will be able to intercept incoming missiles, such as the Iranian-produced Zelzals and Fajrs that threaten central Israel, in the medium-range envelope of 25 miles to 160 miles.
Israel has also announced that it wants to buy the land-based derivative of the U.S. Phalanx naval close-in weapon system as a counter to the short-range rockets and mortar shells used by Hamas.
This system, made by Raytheon, combines a six-barreled, 20mm Vulcan Gatling gun capable of firing 3,000 to 4,500 rounds per minute, a digital search radar, a tracking radar and a forward-looking-infrared imaging system with automatic target acquisition and tracking capability.