"War is ugly, awfully ugly," Deputy Prime Minister Dan Meridor told diplomats and journalists at a think tank called the Jerusalem Center for Public Affairs.
"In modern times, because war is all the time on television ... people see this and can't take it. There are limits. There is a price you pay."
He added: "Because it is difficult, one looks for other ways. One of those other ways is the intelligence community of all the world trying to do things that don't look that ugly, don't kill people."
He declined to discuss the mysterious Stuxnet worm found in Iranian networks last year, but his remarks underscored Israelis' doubts about delivering on veiled threats to use open force against their arch-foe's nuclear program.
"And all the world that is not on the screen, the cyber world ... becomes more important in the conflict between nations. It is a new battleground, if you like, not with guns but with something else," he said.
Meridor, who oversees Israel's spy services and nuclear affairs, said Israel had learned from news coverage and the ensuing public censure of its conflicts with often outgunned enemies.
Over the past two years, Israeli officials have quietly unveiled cyber war capabilities that they say are a core pillar of defense strategy.
They also hint at having mounted sabotage campaigns to slow down Iran's uranium enrichment and missile projects, in which Israel sees a potentially mortal threat.
Though Israel is reputed to have the Middle East's only atomic arsenal, many analysts regard its conventional forces as too small to inflict lasting damage on Iranian nuclear facilities which are distant, dispersed and well-defended.
Israel is also wary of drawing retaliatory missile salvoes from the Islamic republic -- which denies seeking the bomb while preaching the Jewish state's destruction -- as well as knock-on fighting with Tehran's guerrilla allies in Lebanon and Gaza.
While reiterating Prime Minister Benjamin Netanyahu's and U.S. President Barack Obama's pledge to keep "all options on the table," Meridor said international sanctions designed to curb Tehran could prove successful if stepped up by Washington.
"Iran will have to rethink their policy ... if they understand the Americans are saying to them simply, 'You will not get them (nuclear weapons)."