The Haaretz daily said the test of the Shahab-3 was conducted last week and was the most successful of seven or eight launches over the past five years.
The newspaper said the Shahab-3 has a range of more than 812 miles.
Israel's army chief, Lt. Gen. Moshe Yaalon, will discuss the threat posed by Iran when he meets with U.S. defense officials next week, Haaretz said.
Israeli Foreign Minister Silvan Shalom said Friday that he hoped the International Atomic Energy Agency and international powers would pressure Iran to allow weapons inspectors into the country and to sign nonproliferation agreements guaranteeing that it has no intention to develop nuclear weapons.
"The radical regime in Iran is threatening the stability not only of the state of Israel, but the European countries also," Shalom said. "Iran is a danger to the stability of all the world."
Earlier this week, the head of the country's atomic energy organization, Gholamreza Aghazadeh, was quoted by Iranian media as saying Iran was ready to sign additional agreements to prove it did not intend to develop nuclear weapons, but only under certain conditions. It's not clear what criteria would satisfy Iran.
It's not clear how effectively the Shahab-3 missile would be in delivering a chemical, biological or nuclear payload. The missile is a modified version of North Korea (news - web sites)'s Nodong-1 surface-to-surface missile.