By Ori Lewis

JERUSALEM (Reuters) - Israel has completed successful tests of an advanced version of its 'David's Sling' intermediate missile interceptor system that it is developing jointly with the United States, the Defence Ministry said on Wednesday.

The system is designed to shoot down rockets with ranges of 100 to 200 km (63 to 125 miles) such as those in the arsenal of Iranian-backed Hezbollah, a Lebanese group which last fought a war with Israel in 2006, or aircraft or low-flying cruise missiles.

An initial version of David's Sling completed testing in December 2015 and has been handed over to the Israeli air force but it has not yet been declared operational, a ministry official said.

The system is being developed and manufactured jointly by Israel's state-owned Rafael Advanced Defense Systems Ltd and Raytheon Co, a top U.S. arms maker.

The advanced testing announced on Wednesday included the interception of air-launched incoming test target missiles high over the Mediterranean, Moshe Patel of the Israel Missile Defense Organization said in a telephone briefing.

"The tests were intended to simulate anticipated future threats and in the coming years our system will deliver to the Israeli air force more capabilities and more confidence," Patel said.

David's Sling will fill the operational gap between the already deployed Iron Dome short-range rocket interceptor and the Arrow ballistic missile interceptor, both of which are in service.

Last week Israel handed over control of its U.S.-funded Arrow-3 missile interceptor, a "Star Wars"-like extension of its capabilities which is designed to safely destroy incoming long-range missiles in outer space.

That system has been developed jointly by state-owned Israel Aerospace Industries and U.S. firm Boeing Co..

The U.S.-funded short-range Iron Dome interceptor built by Israel's state-owned Rafael Advanced Defense Systems Ltd. was used extensively with high success rates in a 2014 Gaza war against Hamas militants.

(Writing by Ori Lewis; Editing by Gareth Jones)