Israeli intelligence miscalculated the threat posed by Saddam Hussein, an Israeli think-tank has suggested.
No weapons have been found so far
This contributed to the "false" picture painted by US and British services, said the Jaffee Center for Strategic Studies at Tel Aviv University.
The country's secret services could lose their credibility over the issue, Israeli politicians have warned.
Six months after the end of major hostilities, no weapons of mass destruction have been found in Iraq.
"Israeli intelligence was a full partner with the US and Britain in developing a false picture of Saddam Hussein's weapons of mass destruction capability," said the author of the report, retired Brigadier General Shlomo Brom.
"It badly overestimated the Iraqi threat to Israel and reinforced the American and British belief that the weapons existed."
"If Israeli intelligence had argued Iraq did not have capabilities and there was no real threat, it would have had some effect," he said.
Senior Israeli politicians have expressed fears that the findings will have an impact on the perception of the country's secret services.
"From now on, when we present serious data on other countries, like Iran for example, who will treat us seriously?" Israel Radio quoted Israeli left-wing parliamentarian Yossi Sarid as saying.
The 1,400-member Iraq Survey Group has been looking for evidence of Iraq's alleged weapons of mass destruction - a key justification for the war.
British and American leaders have come under increasing pressure over the intelligence cited in the run-up to the war.
A committee of the US Senate is trying to establish how solid the pre-war intelligence on Iraq was, whether mistakes were made in interpreting it, and whether the information was manipulated.