The system, known as Fliker, fires interceptors at incoming surface-to-air missiles, mainly Russian-built systems, it says are now in the hands of its foes.
Fliker is being developed by Rafael's Manor Technologies Division, which specializes in warheads, with support from the Defense Ministry's Research & Development Directorate.
The interceptor carries a warhead, which is like rocket-propelled grenade, and is activated by an advanced optical proximity sensor developed by Rafael.
The Fliker interceptor is designed to hit as far as possible from the launch aircraft to minimize debris and shrapnel hitting the aircraft.
The rotating system "is designed to serve as the second layer of defense for helicopters and will be activated when automatic flares fail to divert an incoming missile," The Jerusalem Post reported.
If it's approved, Fliker, designed as an add-on defensive layer, will be used to arm the air force's 330 helicopters, ranging from twin-engined CH-53D Sea Stallions to light Bell 212 observation craft.
The system, which had successfully undergone recent testing, is the latest in a string of new weapons the Israeli military has announced amid growing concerns that a new regional conflict is simmering.
This war, with Iran, Syria and their proxies Hezbollah and Hamas in Lebanon and Gaza the likely adversaries, is expected to focus largely on a sustained missile and rocket bombardment of the Jewish state on an unprecedented scale.
Hezbollah, which is reputed to have in excess of 42,000 surface-to-surface missiles and rockets that can be unleashed on the Jewish state, is now reported to have an array of Russian-built SAMs.
These weapons, supplied by Iran and Syria, could challenge Israel's mastery of the skies over Lebanon for the first time.
The Post recently reported that the Shiite guerrillas, who have underground missile depots across their heartland in the Bekaa Valley of northeastern Lebanon, now possess the truck-mounted SA-8, a Russian mobile SAM system with a range of 20 miles.
Hamas is believed to have received SAMs from Iran, as well as an unknown number of Soviet-era weapons plundered from Libya during and after its eight-month civil war in 2011.
Israel says it's spotted some of the 480 shoulder-fired Russian Igla-S 9K-338 SAMS, NATO codename SA-24 Grinch, that Western counter-terrorism officials say are missing from Libya.
The SA-24, built by Russia's KBM design bureau at Kolomna outside Moscow, is one of the most potent surface-to-air missiles currently in service.
It's effective up to 19,000 feet and is resistant to most electronic counter-measures.
However, Israeli AH-64 gunships operating over Gaza were reported to have been able to defeat SA-24s sold to Iran and apparently passed on to the Palestinians in Gaza, as well as Hezbollah.
The Israelis have not commented on these reports. But the air force's fixed wing squadrons, equipped largely with U.S.-made aircraft and weapons systems, is capable of countering the SA-8 with electronic jamming systems and precision-guided munitions.
They displayed these capabilities Sept. 6, 2007, when seven F-15I Boeing Raam fighters destroyed a suspected nuclear reactor being built by North Korea in Syria at Deir al-Zor 80 miles from the Iraqi border.
The warplanes in Operation Orchard were able to evade Syrian air defenses during the night-time raid because an electronic warfare aircraft accompanying them blinded Syrian radars and missiles defenses.
The Post's military editor, Yaakov Katz, noted that Fliker is part of the operational doctrine the air force is upgrading "to confront the proliferation of advanced surface-to-air missiles throughout the region."
The plan, dubbed "White Paper," says that Syria, despite its internal convulsions, has received several batteries of Russian-built SA-17 SAMS, also known as the Buk System.
The truck-mounted SA-17, NATO codename Grizzly, has a range of 18 miles and can engage multiple targets at altitudes of up 40,000 feet.
These days, the Israeli air force has had to adjust its operations over its northern and southern borders with Syria, Lebanon, Egypt and the Palestinian-ruled Gaza Strip because of the proliferation of the SAMS.
The Post said a missile was fired at an Israel AH-64 Apache over the border with Egypt in August 2011, but it missed.