Contacted by AFP, the White House did not deny the report, which cites several serving and former US officials, but stressed the importance of its ongoing close ties with Israel.
Netanyahu's office in Jerusalem as well as the spokesman of the Israeli foreign ministry declined to comment on the report.
Two years ago, after rogue intelligence contractor Edward Snowden revealed the vast extent of the National Security Agency's online surveillance, President Barack Obama promised to limit spying on US allies.
But, according to The Wall Street Journal report, Obama decided there was a "compelling national security purpose" in continuing to monitor some leaders, including Netanyahu and Turkey's President Recep Tayyip Erdogan.
The US administration decided not to remove or disable the "cyber-implants" it had secreted on foreign communications systems, as they would be hard to replace.
Instead, the report says, Obama ordered that some of the hacked systems used by close allies would not be routinely monitored by the NSA, while others would continue to be mined for intel.
In Netanyahu's case, Washington was concerned that Israel was itself monitoring US negotiations with Iran and might try to derail the effort to reach a deal on Tehran's nuclear program.
Last March, Israel denied reports in The Wall Street Journal that its security forces spied on the negotiations between Tehran and major powers over Iran's nuclear capacities.
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