UPDATE:
MISSILE DEFENSE AGAINST ULTRA-SHORT RANGE ROCKETS

Israel is facing three general categories of ultra-short range rocket threats:
 Katyushas – The longest range in this category of threats, katyushas were used extensively to batter northern Israel in the 2nd Lebanon war, and have been increasingly seen by terrorists in Gaza against Ashkelon and other communities
 Kassams – With ranges from several kilometers up to 12.5 km, this locally manufactured threat is the most common rocket in use by Gaza terrorists against Sderot and other Gaza-bordering communities
 Mortars – The shortest range and smallest of this class of threats.  They are in common use from Gaza against many of the communities situated closes to the border.

Options for Active Defense:

In addition to air or ground attack operations against launchers and launch crews, and the use of passive defenses like shelters, active defense against rockets after they are launched can provide an important capability to deal with this terror weapon.   While active defense systems are not yet deployed against this threat class in Israel, different approaches are either in-work or under consideration.
Option for an integrated “system of systems:”  Given the several different capabilities, technologies and availability schedules for the different weapon system options, an integrated system design would provide maximum flexibility and the earliest possible implementation.  The foundation of an integrated system would be the Iron Dome interceptor now in its design phase, with the two other system options available to be integrated and used by a common battle-management and control system.

 Iron Dome rocket interceptor – The Iron Dome program has been under development by RAFAEL for more than a year, with the goal of developing small and relatively inexpensive missiles that could be used to intercept and destroy these threats.  This system is currently projected for completion and initial deployment in 2010, and will provide an important new dimension of capability to deal with ultra-short range rockets.  Iron Dome will be useable against both katyushas and kassams.  While the final capability against the shortest range kassams may be more limited, this system will effectively address most of this threat class, and will offer an important new capability against both the katyusha threat on the northern border and the kassam and katyusha threats Israel faces from Gaza.

 Nautilus / Skyguard high energy laser system -- The Nautilus or Tactical High Energy Laser (THEL) ACTD prototype was developed as a joint US Army and Israel Ministry of Defense program, performed by a joint US / Israel corporate team led by Northrop Grumman, including RAFAEL, Israel Aircraft Industries and Tadiran.   There are two options for use of this approach:

Option One: manufacturing “Block II” operational system – Referred to by Northrop Grumman as “Skyguard,” this would be a more easily transportable weapon system based extensively in the designs of the THEL prototype, but with several changes to give the weapon system substantially greater capability.  Northrop Grumman has estimated it would require 18 months to build the first system, with succeeding fire units requiring additional time.
Option Two: using the (upgraded) existing prototype – The prototype exists and was used successfully in tests against katyushas, artillery shells and mortars in testing from 2000 through 2004.  The prototype demonstrated high kill probabilities, though limited availability would require upgrades to enable operational use.  It was designed to be transportable for use in Israel.  Schedule for acquisition of an (upgraded) prototype is expected to be on the order of 12 months.

 Ground-based Phalanx – This system is a ground-based version of a high-performance gun developed some time ago for use in ship defense against anti-ship missiles.  Using a very rapid-fire gun, this system projects a “cloud” of shells in the air to intercept threats of this class at short range. 
While this weapon is the shortest range of the different active defense options being considered, it could provide another layer of capability, with particular relevance for unique, high-value assets.  Implementation schedule is expected to be less than a year, depending on hardware availability.