The system, known as Trophy, has been in development by Rafael Advanced Defense Systems for some time but was given impetus by the setbacks the Israeli military suffered in the 2006 fighting.
The Merkava IV saw its first heavy combat in the 2006 war.
At the recent unveiling of Trophy at a military base overlooking the Mediterranean, the commander of Israeli armor in northern Israel, identified only as Yehezkel, said Trophy will be installed on a battalion of the latest Merkava IVs -- around 36 tanks -- by the end of the year.
He noted that of the 250-300 Merkavas engaged in the 2006 war against Hezbollah, half a dozen were destroyed by mines or rockets, largely the Russian 9M133 Kornet, known in NATO as the AT-14 Spriggan, the 9K111 Fagot, or AT-4 Spigot, and the 9K113 Konkurs, or AT-5 Spandrel.
More than 30 were disabled, although many of those were repaired and remained operational, by marauding Hezbollah hunter-killer missile teams operating across south Lebanon, where the main ground fighting took place.
Nineteen Merkava crewmen were killed. The Israeli military had not suffered armored losses like that since the 1973 war against Egypt and Syria, but in that conflict Israel was fighting conventional armies, not guerrillas. Against less-well-armed Hamas forces in the Gaza Strip in the 22-day winter war in December 2008-January 2009, the Israelis' only casualty in the Armored Corps, which deployed 130-140 tanks, was a crewman shot by a sniper, according to Yehezkel.
Rafael says Trophy can block any anti-tank guided missile that Hezbollah may have.
The system's built-in radar detects incoming missiles and fires small charges to destroy them, then automatically reloads. It can even detect whether an incoming round is going to miss the tank and ignore it as a target.
That capability, ignoring missiles whose trajectory indicate they will not hit buildings or crowds of people, is also employed in the Iron Dome system designed to shoot down short-range missiles such as the Grads and Katyushas used by Hezbollah.
State-owned Israel Military Industries, which manufactures the Merkava, is currently developing another anti-missile system known as Iron Fist, which is intended to protect armored personnel carriers and enter service in 2011.
Company officials said it differs from Trophy by employing electronic jammers that make incoming missiles veer off course and then, if that doesn't work, creates an electronic shock wave that destroys them.
Rafael declined to specify the cost of the Trophy system, but the Israeli media has pegged it at $200,000 per tank. The 65-ton Merkava costs $5 million.
John Pike, a military analyst and director of the Virginia-based GlobalSecurity.org military data Web site, said the U.S. military was monitoring the Trophy system for possible absorption into its Future Combat System program.