Liberman called the claims "false and malicious."
The Israeli embassy also condemned the accusation that Israel spies on the United States.
Senior Israeli diplomatic officials said that the accusations made by Newsweek were anti-Semitic and represented Israel as the enemy, Israel Radio reported.
The Newsweek report claimed that a US Congressional panel discussing Israel's entry into the visa waiver program was told that Israel's espionage activities in the US "go far beyond that of other close American allies, such as Germany, France, the UK and Japan."
According to the report, Israel's efforts to "steal US secrets under the cover of trade missions and joint defense technology contracts have crossed red lines."
Permitting Israel into the visa waiver program would exempt Israeli nationals from having to produce a tourist visa, allowing them to stay in the country for a period of up to 90 days.
Until recently, the widespread perception has been that two major obstacles have kept Israel from joining the program - allegations by US officials that Israel has discriminated against Arab- and Muslim-Americans seeking entry, and a proliferation of young Israelis traveling to the United States as tourists and then working illegally.
But according to the Newsweek report, and a report from last month in the Washington DC newspaper Roll Call, intelligence officials in Washington have expressed their reservations to Congress regarding the potential harm that could be done to US national security by Israeli spies who could exploit the waiver.
A congressional staffer familiar with a briefing last January told Newsweek that the testimony given to the panel on Israeli espionage was “very sobering…alarming…even terrifying.”
According to Newsweek the primary targets of Israel's spying were American industrial and technical secrets.
According to a former congressional aid cited in the report, who was present at a different classified briefing in 2013, “No other country close to the United States continues to cross the line on espionage like the Israelis do.”
“I don’t think anyone was surprised by these revelations,” the former aide said. “But when you step back and hear…that there are no other countries taking advantage of our security relationship the way the Israelis are for espionage purposes, it is quite shocking. I mean, it shouldn’t be lost on anyone that after all the hand-wringing over [Jonathan] Pollard, it’s still going on.”
With regard to the alleged Israeli espionage, Paul Pillar, the CIA’s former national intelligence officer for the Near East and South Asia, told Newsweek that Israel was dispatching spies to America before there even was an Israel, to gather money and materials for the cause and later the fledgling state. Pillar said key components for Israel’s nuclear bombs were clandestinely obtained in the US.
“If we give them free rein to send people over here, how are we going to stop that?” the former congressional aide asked. “They’re incredibly aggressive. They’re aggressive in all aspects of their relationship with the United States. Why would their intelligence relationship with us be any different," Pillar told Newsweek.
The issue of Israeli espionage against the United States is a particularly sensitive one, especially since the arrest of Israeli spy Jonathan Pollard and the fallout over his case. Pollard's release from a US prison was discussed as part of Washington's efforts to move the latest round of Israeli-Palestinian peace talks forward.
JTA contributed to this report.