According to Yedioth Ahronoth newspaper, the report said the Iranian foreign minister met with the foreign minister of the Oceania nation Solomon Islands last year and promised him a check in the amount of $200,000, along with technological aid.
These incentives were meant to come in exchange for an end to the nation's support of Israel.
Shortly after the offer was made the Solomon Islands' foreign minister visited Tehran.
Michael Ronen, Israel's ambassador to the Solomon Islands, said in response to the Yedioth report that "Israelis very active in nurturing its relations with countries in the region".
"We don't believe in conditions and we don't offer money in exchange for support" Ronen added. "We offer mainly humanitarian support, in order to stress that we are a positive power in the region."
He added that small states will always be tempted by cash donations. "Iran won the support of the Solomon Islands for $200,000. I won't offer $250,000 to overturn the decision. Israel does not buy support for money," Ronen said.
"The Solomon Islands have never been supportive of Israel. It has never been against us but has always refrained or been absent from votes. Israel also has a lot of friends here in the press and the social sector, but we won't threaten them to remove our support," he added.
The public in the Solomon Islands and the media, which reject ties with Iran, will do this and the local government will pay with public opinion."
The Solomon Islands is a very poor nation made up of 990 islands inhabited by 600,000 residents.