Israel is likely to have planted mobile phone spying devices near the White House and other sensitive locations in the USA capital over the past two years, according to a report from Politico that cited three former U.S. officials.
"A blatant lie", the statement said.
The report quoted three unnamed former senior United States officials "with knowledge of the matter".
The report alleges Israel planted small devices that mimic the actions of cellphone towers, tricking phones into handing over their locations, call contents and data use.
"It was pretty clear that the Israelis were responsible", said a former senior intelligence official, according to Politico.
The Prime Minister's Office issued an unequivocal denial of the Politico story. Like Yadlin's comments, the office said the Israeli government has a directive not to engage in intelligence operations on US soil. And the Trump administration has reportedly failed to confront the Israeli government over the alleged spying tools.
"The reaction. was very different than it would have been in the last [Obama] administration", one former senior intelligence official was quoted as saying.
The former official criticized the administration's approach to the matter. "I'm not aware of any accountability at all".
Another official quoted in the report accused the Israelis of being "pretty aggressive" in their intelligence-gathering operations.
However, one former official noted that although it was worrying that Israel was allegedly spying on the U.S., "on the other hand, guess what we do in Tel Aviv?"
Amos Yadlin, a former IDF general who headed the Intelligence Directorate, derided the report as "fake news seasoned with anti-Semitism".
And Elad Strohmayer, an Israeli embassy spokesperson, told Politico that the allegations were "absolute nonsense".
The American paper added that the Federal Bureau of Investigation and other agencies working on the case believe that Israel is to be blamed because of the high level of know-how and budget needed for the operation.
Politico reported Thursday that the conclusion was reached over the last two years. But aides told the newspaper that Trump, who has been pressured into using his secure White House landline more often these days, has still refused to give up his iPhones.