Israel's Prime Minister Benjamin Netanyahu on Monday called for an increase in defence spending, after a bloody and costly war in Gaza.

"There is no leader who, faced with the threats that are multiplying around us, would not allow or demand a significant increase in the defence budget, to counter security challenges," he said in a statement.

Such an increase would likely involve "several billion" Israeli shekels, Netanyahu said.

Netanyahu and Defence Minister Moshe Yaalon have been fighting for a big hike in defence spending against fierce resistance from Finance Minister Yair Lapid.

Israel waged a 50-day campaign against militants in the Gaza Strip during July and August, in a conflict that cost more than 2,100 Palestinian lives and 73 on the Israeli side.

The financial cost to Israel of its the third and longest Gaza war in six years is estimated at around three to four billion dollars, experts say.

The defence ministry has demanded a grant for a similar sum to restock on ammunition, including for its Iron Dome defence system.

Israeli media say the treasury wants to limit the sum to $690 million.

If it gives into the financial demands of a powerful military lobby, the government could be forced to cut budgets elsewhere, particularly in education, and to increase taxes, bringing socio-economic pressure on itself.

Defence spending is expected to reach $18 billion this year -- making up some six percent of GDP -- and includes some $3 billion in aid from ally the United States.