Israeli and US troops have wrapped up a major missile defence exercise hailed as their largest-ever joint aerial military operation, the Israeli military said on Wednesday.

"Yesterday, US European Command and the Israel Defence Forces successfully concluded Austere Challenge 2012, a large-scale air defence exercise that included both field training and command post simulations," an army statement said.

The exercise involved some 3,500 personnel from the US European Command (US EUCOM) and 1,000 Israeli troops. It began in late October and was seen as sending a clear signal to Iran over its disputed nuclear drive, which much of the West believes masks a weapons drive despite Tehran's denial.

Troops trained together on Israel's Iron Dome missile defence system, the latest version of the US Patriot, and the Arrow anti-ballistic missile system, which was jointly developed by the two allies.

During the exercise, which lasted more than three weeks, violence between Israel and Gaza militants flared twice, with groups in the Palestinian territory firing hundreds of rockets into the Jewish state, some of which were intercepted by the Iron Dome system.

The exercise was expected to cost around $38 million (30 million euros), with Washington covering more than three-quarters of the total cost.