Maj. Gen. Udi Shani, the ministry's director general, said this week that the ministry has established a cyber center to support the defense industry in coping with cyberthreats.
The center will be run by the ministry's authority for the development of Weapons and Technological Infrastructure.
"Our big challenge is the system," Shani said during the annual Herzliya Conference on regional security near Tel Aviv.
"It's made up of data storage and products that are totally civilian, like laptops."
Israel, which has the most advanced defense industry in the region and a cutting edge electronics sector, should develop its own state-of-the-art defense tools to cope with the wide range of cyberthreats that are emerging.
"If we do this all in-house, we enter a new budget vector," Shani said, arguing that military supervision of manufacturing would help contain the emerging threats.
Israel is particularly focused on Iran as its main cyberwar threat, and since 2009, possibly on conjunction with U.S. intelligence services, has been sabotaging the Islamic Republic's contentious nuclear program with crippling viruses like Stuxnet.
Shani said that many Israeli military networks, such as the Ground Forces' Digital Ground Army System, use Windows and that many components incorporated in Israeli networks are manufactured abroad, which make these systems vulnerable.
Underlining his concerns, Kaspersky Labs, a leading IT security company that uncovered several important viruses over the last couple of years, warned that Israel is one of 23 countries targeted by a new virus dubbed MiniDuke.
The Moscow company said the virus penetrates Adobe Reader PDF files to install a new, highly customized malware in computers.
Kaspersky said MiniDuke had been used in recent weeks to attacks dozens of servers in government organizations and institutions around the world. Among the countries hit were the United States, Belgium, Portugal, Ukraine, Romania, the Czech Republic, Hungary and Ireland via servers in Panama and Turkey.
Eugene Kaspersky, the security company's founder and chief executive officer, said the operations ranked as some of the most sophisticated cyberattacks he had observed in some time.
"This is a very unusual cyberattack," he said. "I remember this style of malicious programming from the end of the 1990s and the beginning of the 2000s ...
"The combination of experienced old school malware writers using newly discovered exploits and clever social engineering to compromise high-profile targets is extremely dangerous."
Israel and Iran are seen as two increasingly active cyber powers. The Financial Times reported in February that the Islamic Republic "is being seen by the U.S. as an increasingly capable actor in cyber offensive weaponry."
Gen. William Shelton, head of the U.S. Air Force Space Command who also oversees its cyber operations, said in 2012 that Iran "will be a force to be reckoned with" in the cyber battlefield.
He said Tehran has significantly boosted its cyber warfare program since the first Stuxnet attack in 2009 on the uranium enrichment center at Natanz in central Iran.
Israel has threatened to launch pre-emptive strikes against Iran's nuclear network, but has been restrained by the Americans.
The general belief is that Israel is unlikely to take military action against Iran in 2013. But," the Financial Times noted, "it would be no surprise if both sides tried to gain an advantage over the other by covert means, and especially in the realm of cyber conflict."
In February, the Israeli military inaugurated a cyberdefense control center after two years of planning, part of the cyber infrastructure it is constructing.
Israel has been amassing a multibillion-dollar arsenal of electronic weapons to use against the Islamic Republic in a largely covert campaign but which could come out of the shadows if Israel decides to launch pre-emptive strikes against Iran's nuclear program.
"The world of attacks is changing rapidly," a senior Israeli officer told The Jerusalem Post.
But he said few countries have Israel's "kind of defense ability. This is part of the military's readiness to ensure continuity of conventional operations. This continuity is based on cybersecurity."