By Sky News US Team
Israel has denied a claim that it spied on US-led nuclear talks with Iran in order to undermine support for a deal.
A Wall Street Journal report, quoting current and former US officials, said the Israelis had eavesdropped on the negotiations.
Israel also obtained intelligence from secret US briefings, informants and diplomatic contacts in Europe, according to the Journal.
The White House was said to be especially angry because Israel had shared its inside information with US lawmakers to brief against a nuclear accord.
"It is one thing for the US and Israel to spy on each other," the Journal quoted a senior US official briefed on the matter as saying.
"It is another thing for Israel to steal US secrets and play them back to US legislators to undermine US diplomacy."
The spying was reportedly discovered by American intelligence intercepting communications by Israeli officials.
Israeli Foreign Minister Avigdor Lieberman said the report was "not true".
"We do not spy on the United States," he said. "There are enough participants in these negotiations, including Iranians.
"We got our intelligence from other sources, not from the United States."
Republican House Speaker John Boehner said he was "baffled" by reports of Israeli spying.
If true, the espionage would do little to allay the currently strained relations between the two allies.
Scarcely a day has passed since Prime Minister Benjamin Netanyahu's return to power last week without a critical comment by Obama administration officials, who were outraged by his pre-election posturing.
The Israeli prime minister apologised on Monday for his remarks playing the race card to drum up more right-wing votes at the expense of Israel's Arab minority.
He also backtracked on comments flatly ruling out a Palestinian state - a White House foreign policy priority which spurred months of fruitless shuttle diplomacy by US Secretary of State John Kerry.
US officials, however, have been unimpressed by Mr Netanyahu's olive branch.
White House Chief of Staff Denis McDonough told a left-leaning pro-Israel lobby on Monday: "We cannot simply pretend that those comments were never made."
Mr Netanyahu irked the White House earlier this month by addressing the US Congress to warn in apocalyptic terms against a deal with Iran.
Many Republican lawmakers are backing the Israeli prime minister ahead of the US president.
Under the emerging terms of the deal, the US, UK, France, Germany, Russia and China are offering to ease sanctions if Iran limits its nuclear programme.
Iran says its uranium enrichment is for civilian energy purposes and denies its plans to build a bomb.
