Israel announced it was setting up a national inquiry on Monday after a newspaper reported illicit use by police of powerful spyware against confidants of former Prime Minister Benjamin Netanyahu and other public figures.
Pegasus, a cellphone hacking tool made by Israel's NSO Group, was used to "phish for intelligence even before any investigation had been opened against the targets, and without judicial warrants", Calcalist said in an unsourced report.
The furore has added a domestic angle to allegations that surfaced last year of misuse of Pegasus by foreign clients against journalists, rights activists and other figures, which prompted the Israeli government to order export reviews.
NSO says all its sales are government-authorised and that it does not itself run Pegasus.
Calcalist said targets in Israel included a son of and two aides to Netanyahu - who is on trial on corruption charges he denies - as well as a co-defendant and several witnesses, and, separately, two former officials suspected in leaks to journalists.
The court hearing the case against Netanyahu said it was cancelling the next session, scheduled for Tuesday, and would await answers from the prosecution about the hacking allegations before deciding whether proceedings would resume on Wednesday.
Omer Barlev, the minister for police, said he was setting up a cabinet-level commission of inquiry, drawing calls from some colleagues in the government for a more independent probe.
Prime Minister Naftali Bennett called the allegations against the police "very serious, if true".
Pegasus, he said in a statement, was "not intended to be used in phishing campaigns targeting the Israeli public or officials, which is why we need to understand exactly what happened".
Calling for some police to face criminal investigation, Health Minister Nitzan Horowitz said: "Those who turned a blind eye to this activity abroad, must now deal with it here."
(Additional reporting by Henriette Chacar; Editing by Alex Richardson and William Maclean)
