The miniature surveillance devices mimic telecommunications towers to gather information, including the contents of phone calls.
Israel is days away from a general election, with Mr Netanyahu fighting to hold on to his office.
"There is a longstanding commitment, and a directive from the Israeli government not to engage in any intelligence operations in the U.S. This directive is strictly enforced without exception", Netanyahu's office added in Thursday's statement.
Speaking on a trip to Russia, Netanyahu said there was no eavesdropping on cell phones around the USA presidency because he had forbidden spying against the United States.
Israeli Prime Minister Benjamin Netanyahu flew on Thursday to the Black Sea resort city of Sochi, where he met with.
"Israel does not conduct any espionage missions in the United States", said Foreign and Intelligence Minister Israel Katz.
The report said some people within the Trump administration had suspected Israel was eavesdropping on communications from the White House.
This, despite the fact that, according to one of the former officials cited in the report, "the devices were likely meant to spy on President Donald Trump... as well as his top aides and closest associates". "The U.S. and Israel share a lot of intelligence information and work together to prevent threats and strengthen the security of both countries".
In 2015, The Wall Street Journal cited current and former USA officials at the time divulging that US surveillance programs captured communications between members of Congress and Israeli leaders, providing intelligence information about Israeli efforts to lobby against the JCPOA.
Amos Yadlin, a former head of Israeli military intelligence, wrote on Twitter that the report was "fake news with a spice of anti-Semitism".
Charles Freilich, a former national security adviser in Israel and an analyst on U.S. -Israel relations also said the report was likely false.
"Israel's policy for decades has unequivocally banned spying in the United States".
This same official also criticised the Trump administration, saying they did not publicly or privately reprimand the Israeli government for the alleged spying. "I find that hard to believe". "This is pure nonsense, Israel learned its lesson the hard way with Pollard, and made a clear decision never to risk the relationship so severely again".
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. He only got out of jail in the U.S.in 2015, after years of consistent lobbying from the Israeli government, including Netanyahu personally.
According to the article, "the Federal Bureau of Investigation and other agencies" were convinced Israel was behind the intelligence operation.