Officials say the satellite has already begun transmitting
The Israeli press is reporting that the satellite will improve Israel's ability to monitor Iran's military activities.
Indian officials that given these sensitivities, the operation was secret and carried out under tight security.
The Tecsar satellite - sometimes referred to as the Polaris - was put into space on Monday morning.
'Sinister tie-up'
Tecsar is said to have enhanced footage technology, which allows it to transmit images regardless of daytime and weather conditions.
It is considered to be one of the most advanced spy satellites that India has put into orbit to date.
India is eager to compete in the world space technology market
Correspondents say the launch was the second commercial mission on behalf of another country that has been carried out by the Indian Space Research Organisation.
"It was a grand success," an unnamed official told the AFP news agency from the southern state of Andhra Pradesh.
Israeli newspapers reported that both Israeli and Indian space engineers were at the launch, and that 80 minutes afterwards, the Israel Aerospace Industries' (IAI) ground station began receiving Tecsar's first signals.
The 300kg (650-pound) satellite is reported to be Israel's most advanced space craft, and equipped with a camera that can take pictures in almost any weather conditions.
Israel reportedly took the decision to launch the satellite from India three years ago, and asked for Delhi's help because it lacks a vehicle capable of boosting the satellite into a polar orbit.
"The kind of low-earth polar orbit they are putting the satellite into, it is meant to give Israel the capability to keep an eye on the Iranian nuclear programme," an unnamed defence analyst told the AFP news agency.
"This is bound to be seen in the Islamic world as a sinister tie-up between Israel and India," he said.
Experts also say that the launch is an "important milestone" in the commercialisation of India's 45-year-old space programme, which put an Italian satellite in orbit in April last year for a fee of $11m.
Correspondents say that India is eager to compete against the US, Russia, China, the Ukraine and the European Space Agency in providing commercial satellite launch services, a market worth about $2.5bn a year.
India started its space programme in 1963, and has since designed, built and launched its own satellites into space.
Israel has today launched an advanced spy satellite, named TecSAR, into orbit on board India's Polar Satellite Launch Vehicle. The PSLV successfully launched from Satish Dhawan Space Centre at 3:45 a.m. GMT today, with a successful cast off from the launch rocket at around 4:05 a.m. GMT. Israel Aerospace Industries report that the first signals were received 80 minutes after the launch, present at which were both Israeli and Indian space engineers.

The launch was delayed several times for unclear reasons. At one point, it was rumoured that the launch had been cancelled completely due to pressure from the US Government. Indian and Israeli authorities denied this, however, citing technical problems instead.

The satellite, also referred to as Polaris, is equipped with the latest in spy technology, including Synthetic aperture radar, which can be used to provide details information on ground cover. The ''BBC'' also reports "enhanced footage technology" - which allows Israel to receive video and images at any time of day or night, and under any weather conditions. Israeli defence officials have said that the satellites main purpose is to track events in Iran, the countries' number one foe. The events that they wish to track include the Iranian nuclear programme, as well as military happenings in Iran and Syria.

The satellite is capable of a maximum resolution of 10 centimetres, of which the first images wil be available in "a few weeks." Development of the satellite has been quoted as "tens of millions of dollars" - and India is benefiting from a major boost in the commercialisation of the countries' 45-year-old space program - which hopes to compete with the US, Russia, China, the Ukraine and the European Space Agency in the satellite launch service field.