Israel recently established the National Cybernetic Taskforce, with orders to devise and implement defensive measures to protect the economy and government from Internet based attacks. The taskforce will consist of about 80 people and will be run by a retired general. Apparently, existing Internet security efforts, and military Cyber War organizations have discovered a growing number of vulnerabilities in the national Internet infrastructure. The only solution to this growing vulnerability is a large scale effort to monitor the national network infrastructure for vulnerabilities, and fix them as quickly as possible. You will never catch all the vulnerabilities, but in Cyber War, as in the more conventional kind, victory is not always a matter of who is better, but who is worse (more vulnerable to attack.)
Meanwhile, Israel makes no secret of what it thinks about its Cyber War capabilities. Over the last year, Israel has revealed that its cryptography operation (Unit 8200) has added computer hacking to its skill set. Last year, the head of Israeli Military Intelligence said that he believed Israel had become the leading practitioner of Cyber War. This came in the wake of suspicions that Israel had created the Stuxnet worm, that got into Iran's nuclear fuel enrichment equipment, and destroyed a lot of it. Recently, Iran complanied that another worm, called Star, was causing them trouble. Usually, intelligence organizations keep quiet about their capabilities, but in this case, the Israelis apparently felt it was more useful to scare the Iranians, with the threat of more stuff like Stuxnet. But the Iranians have turned around and tried to attack Israel, and are apparently determined to keep at it for as long as it takes.
This struggle between Israel and Iran is nothing new. Seven years ago, Israel announced that Unit 8200 had cracked an Iranian communications code, an operation that allowed Israel to read messages concerning Iranian efforts to keep its nuclear weapons program going (with Pakistani help), despite Iranian promises to UN weapons inspectors that the program was being shut down. It's long been known that Unit 8200 of the Israeli army specialized in cracking codes for the government. This was known because so many men who had served in Unit 8200 went on to start companies specializing in cryptography (coding information so that no unauthorized personnel can know what the data is.) But it is unusual for a code-cracking organization to admit to deciphering someone's code. Perhaps the Iranians stopped using the code in question, or perhaps the Israelis just wanted to scare the Iranians. Israel is very concerned about Iran getting nuclear weapons, mainly because the Islamic conservatives that control Iran have as one of their primary goals the destruction of Israel. In response to these Iranian threats, Israel has said that it will do whatever it takes to stop Iran from getting nukes. This apparently includes doing the unthinkable (for a code cracking outfit); admitting that you had successfully taken apart an opponent's secret code.
Israel is trying to convince Iran that a long-time superiority in code-breaking was now accompanied by similarly exceptional hacking skills. Whether it's true or not, it's got to have rattled the Iranians. The failure of their counterattacks can only have added to their unease.