Prime Minister Benjamin Netanyahu said on Monday Israel would not give in to "subhuman" terrorists, as the Jewish state honoured its slain soldiers and civilians killed in militant attacks.

Netanyahu, at a ceremony at the Mount Herzl national cemetery, cited the case of Israeli toddler Adele Biton, still in critical condition after being hurt in a stone-throwing attack on her mother's car in the West Bank a month ago.

"As if anyone needed it we got a reminder that a stone is a lethal weapon," he said.

"The terror of stones thrown in an ambush joins the terror of petrol bombs, the terror of knives, the terror of shots and missiles, explosive devices, car bombs and suicide attacks," Netanyahu said.

"But we shall not retreat, not surrender, not give in... Terror is not a blow from above, it is the work of humans, or subhumans. We shall defeat them."

In a Memorial Day ceremony at a military cemetery in Tel Aviv, Defence Minister Moshe Yaalon said that peace was nowhere to be seen on Israel's horizon.

"Terrorist attacks, the firing of rockets at civilian populations and delegitimisation campaigns are the challenges which stand before us in the years to come, they will accompany us for the foreseeable future and they will force us to respond with a firm hand," Yaalon said, adding a warning on Iran.

"The nuclear programme of a country which glorifies Jew-hatred and the destruction of the state of Israel is taking shape, and if it is not dealt with it will threaten Israel, the Middle East and the entire world."

Israel believes the Islamic republic, which has issued numerous bellicose statements against it, is working to develop nuclear arms.

Most recently last month Iran's supreme leader Ayatollah Ali Khamenei said his country would "annihilate" Tel Aviv and Haifa if it is attacked by Israel.

The defence ministry says that since 1860 -- when the first Jewish neighbourhood in Jerusalem outside the Old City was founded and the Israeli-Arab conflict, as considered by Israel, began -- 23,085 soldiers and members of the security forces died in the line of duty, including 92 in the past year.

The number over the past 12 months includes disabled veterans who died during the year, victims of training and road accidents and suicides.

An additional 2,493 civilians were killed in terror attacks in Israel and abroad since 1860, among them 10 in the past year, according to foreign ministry data.

Earlier Monday, traffic came to a halt and pedestrians stood to attention for two minutes while sirens sounded nationwide.

Memorial Day is followed at sunset Monday by Independence Day, marking 65 years since the declaration of statehood on May 14, 1948, which is celebrated according to the Jewish calendar and this year falls on April 16.

Palestinians mark the occasion on May 15, when they commemorate the "Nakba" or "catastrophe" of the creation of Israel, which sparked the exodus of hundreds of thousands of Palestinians.