The 68-meter-long craft, the largest produced in Germany since World War II, is said to be one of the world's most advanced craft of its kind and can launch nuclear weapons, according to foreign sources.

While Israel maintains an official policy known as "nuclear ambiguity," according to which the Jewish state will not be the first or last nation to introduce nuclear weapons in the Middle East, its submarines are designated as a deterrence weapon that affords a second strike capability.

The diesel-electric powered submarine is currently said to be undergoing tests by shipbuilders Howaldtswerke-Deutsche Werft (HDW) , and will join three other such German-built craft already in Israel's fleet, Ma'ariv noted.

One of the other subs recently underwent a comprehensive structural overhaul at the Israeli Navy's northern Haifa shipyard, The Jerusalem Post reported in December 2011.

Israel has invested near 27 million U.S. dollars into the upgrade project. The renovation work was quietly launched two years ago, so as not to alert Israel's enemies to the fact that one of its submarines was temporarily decommissioned, according to the report.

"Every vessel that comes into the shipyard for maintenance comes out with improved capabilities... There are a select number of countries around the world which can independently renovate a submarine," shipyard commander Col. Eli Shouach told the newspaper.

Israel is expected to take command of two more such vessels by the end of 2013.

The sale of the subs, which are partly underwritten by the German government, almost ended last year over sharp criticism by German Chancellor Andrea Merkel of Israel's construction policies in disputed areas of Jerusalem.