The miniature surveillance devices, known as "StingRays", mimic regular mobile phone towers to fool mobile phones into giving them their locations and identity information, they also can capture the contents of calls and data use. The story quotes three former senior U.S. officials who say an FBI investigation pointed the figure directly at Israel.
And the Trump administration has reportedly failed to confront the Israeli government over the alleged spying tools.
That would be a deep contrast to the years-long diplomatic strain that followed the sentencing of Jonathan Pollard, a former US intelligence analyst who pleaded guilty to spying for Israel and who was later granted Israeli citizenship. He said he would do so with "maximum coordination" with the U.S. The publication reported Netanyahu consumed the information en route to Sochi for his Putin meeting.
Israel denies playing any role in the matter.
"Israel does not conduct any espionage missions in the United States", said Foreign and Intelligence Minister Israel Katz.
Netanyahu's office shot down allegations his country was spying on USA soil as "a blatant lie".
Charles Freilich, a former national security adviser in Israel and an analyst on U.S. -Israel relations also said the report was likely false.
Amos Yadlin, a former head of Israeli military intelligence, wrote on Twitter that the report was "fake news with a spice of anti-Semitism".
The revelation is far from the first of its kind: Israeli spying operations targeting the United States have been a constant nuisance for American intelligence agencies over the decades, with Washington even naming the country as a top espionage threat, according to documents leaked by whistleblower Edward Snowden. "I find it very hard to believe that this policy has changed", he said.
Rafi Eitan - a Mossad agent who captured Nazi Adolf Eichmann in 1960 - was exposed in the 1980s as the handler of Jonathan Pollard, a USA analyst who gave thousands of top secret documents to Israel.
The full scope of Pollard's activities have never been fully disclosed, but according to a letter written by then-Defense Secretary Caspar Weinberger to the presiding judge in the case, Pollard was described as one of the most damaging spies ever to operate in the United States.