Israel quickly dismissed the report as "not true", and denied spying on the United States.
The Journal report, quoting current and former US officials, said the operation was designed to infiltrate the talks and help build a case against the emerging terms of a deal.
Besides eavesdropping, Israel obtained information from confidential US briefings, informants and diplomatic contacts in Europe, the officials told the Journal.
It added that more than the espionage, what irked the White House was the fact that Israel shared inside information with American legislators in a bid to sap support for a deal intended to limit Iran's nuclear program.
Many Republicans are opposed to such an accord. "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 Journal quoted a senior US official briefed on the matter as saying.
US intelligence agencies spying on Israel discovered the operation when they intercepted communications among Israeli officials. These communications carried details the Americans believed could only have come from access to the confidential talks, officials said, according to the Journal.
Outgoing Foreign Minister Avigdor Lieberman dismissed the report. "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," he said in Israel.
"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.”
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