Israel has held increasingly sweeping civil defence drills since the 2006 Lebanon war, during which Hezbollah fighters fired thousands of short-range rockets at its northern towns. There have been similar salvoes from Hamas and other Palestinian factions in the Gaza Strip to the south, and Israeli officials say a future war could also involve non-conventional missile strikes by Syria and Iran.
Israeli Officials said it was the first time that the security cabinet, headed by Prime Minister Benjamin Netanyahu, had tested the bunker, dug deep in the western Jerusalem foothills over the past decade and dubbed the "Nation's Tunnel" by local media.
"It is certainly an extreme scenario," Homefront Defence Minister Matan Vilnai said of Wednesday's exercise, dubbed "Turning Point 5", which envisaged heavy shelling and thousands of dead and wounded on several Israeli fronts. "We assume that our enemies would not dare to operate this way, given our deterrent power," he told Army Radio.
Reputed to have the Middle East's only atomic arsenal, Israel bombed an Iraqi reactor in 1981 under what it called a policy of denying foes the means to threaten its destruction.
Israel launched a similar sortie against Syria in 2007 but its veiled threats to tackle Iran's remote and fortified uranium enrichment sites have often been dismissed as bluster given the tactical challenges involved. World powers say they prefer a negotiated resolution with Iran, which denies seeking the bomb.
Disclosures of the Jerusalem bunker's existence prompted some Israelis to question whether their country, which has also been developing an elaborate ballistic missile shield, was taking a more passive approach to potential nuclear threats.
Officials say that providing Israeli leaders with a secret haven from which to respond to attacks would in itself discourage, or at least contain, any future war.
"Israel finally has a proper place to function during emergencies," Vilnai said.