Israeli Defence Minister Ehud Barak signed an agreement with Germany on Wednesday to supply Israel with a sixth Dolphin-class submarine.
Radio Israel said the submarines were capable of carrying cruise missiles equipped with nuclear warheads.
The Israeli army boasts three German-built Dolphin-class subs, two of which were bought in 1991, and will receive another two as part of a 2006 purchase agreement. When exactly the sixth Dolphin will be delivered remains unknown.
The two submarines scheduled to arrive soon are believed to be capable of carrying nuclear warheads, the ranges of which reach 4,500 kilometres. Some believe the vessels could be used in a possible future war against Iran.
German Defence Minister Thomas de Maiziere confirmed the deal on Tuesday after a meeting with Barak, stressing that Germany would contribute to the cost of the submarine.
"We are committed to this [sale] and find it proper," de Maiziere was quoted as saying by the Jewish Telegraphic Agency (JTA).
The JTA quoted Barak as saying that the deal "reflects the depth of Israel and Germany's relationship, as well as the German government's clear commitment to the state of Israel's security."