Jerusalem, Aug 18 (IANS): Israel has announced that it will sell its most advanced missile defence system Arrow-3 to Germany, marking the country's largest-ever military deal.

The Israeli and German defence ministries "will sign the landmark $3.5-billion defence agreement" Xinhua news agency reported, citing a statement issued on Thursday by the Israeli Defence Ministry.

According to the ministry, senior officials from both sides will soon sign a Letter of Commitment, with a preliminary payment of $600 million, and the full contract will be signed by the end of 2023.

"This is a significant decision, which will contribute to the buildup of Israeli forces and economy," Defence Minister Yoav Gallant said in a statement.

The long-range Arrow-3 anti-ballistic missile system, designed to intercept exo-atmospheric ballistic missiles, was jointly developed by Israel and the US.

"With its exceptional long-range interception capabilities, operating at high altitudes above the atmosphere, it stands as the top interceptor of its kind," the Israeli ministry said, adding that "the system employs a hit-to-kill approach for intercepting incoming threats".

The Arrow-3 missile system is part of the country's multi-layer defence doctrine, which includes Iron Dome, a system aimed at intercepting short-range rockets, and David's Sling, which can intercept medium-range missiles.