The Wall Street Journal first reported the claims from unnamed current and former US officials who said the spying operation was intended to help build a case against a deal.
However, an Israeli official immediately branded the reports “utterly false”.
As well as eavesdropping on the talks, the officials had claimed Israel obtained information from confidential US briefings, informants and diplomatic contacts in Europe.
The Wall Street Journal claimed that the White House had been particularly angered that Israel allegedly sought to share confidential details with US politicians as many Republicans in Congress were opposed to a deal with Iran.
“It is one thing for the US and Israel to spy on each other. It is another thing for Israel to steal US secrets and play them back to US legislators to undermine US diplomacy,” the newspaper quoted a senior US official briefed on the matter as saying.
Outgoing Israeli foreign minister Avigdor Lieberman reportedly dismissed the report.
He said: “This report is not true. Obviously Israel has security interests to defend and we have our own intelligence. But we do not spy on the United States. There are enough participants in these negotiations, including Iranians.
“We got our intelligence from other sources, not from the United States. The instruction has been clear for decades now: you don’t spy on the United States, directly or indirectly.”
Meanwhile, Arab political leaders in Israel have rejected prime minister Benjamin Netanyahu’s apology for comments he made in last week’s national elections that offended members of the Arab community.
They said his words made him unsuitable to return for a third consecutive term in office.
In the heat of a close race last week, Mr Netanyahu posted a video on his Facebook page where he implored his hardline supporters to get voting, saying that “left-wing organisations” were transporting Arabs to the polls “in droves”. The comments drew accusations of racism from Arab voters and a White House rebuke.
Mr Netanyahu told a gathering of Arab dignitaries: “I know that what I said a few days ago offended some of Israel’s citizens, offended Israeli Arabs. I had no intention of doing so. I am sorry for this.”
But Arab politicians from the Joint List – a new coalition of mostly Arab parties – said they were not invited to the gathering at the prime minister’s residence.
They said his election victory was illegitimate, claiming Mr Netanyahu won the vote by pandering to anti-Arab fears.
“We call on Netanyahu to return the mandate he received on the basis of incitement and fear-mongering,” the Joint List said in a statement.
The Israeli PM has secured a majority of backers in the new parliament and is expected to be formally approved today.
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