The source, quoted in Haaretz newspaper, has said Israel is trying to block the sale of AMRAAM air-to-air missiles to Jordan for fear it would impair Israel's "qualitative edge" in the region.
"It is not healthy for such weapons to be so short a distance from Israel and it is not clear why Jordan wants them. Clearly if Jordan was attacked we would do the work for them, so there is no justification to sell them the missiles," said the source.
The United States has long adhered to a policy of preserving Israel's "qualitative edge", a political term which means the most advanced technologies will not be sold to Israel's potential rivals or enemies.
Israel is the only state in the Middle East known to possess such weapons, having acquired them in the mid-1980s.
The AMRAAM is a new generation air-to-air missile that is guided by an active pulse-doppler radar. It can acquire its targets beyond visual range and be launched at any angle and speed.
The Israeli foreign and defence ministers, Shaul Mofaz and Silvan Shalom, are said to be the ones who made the decision to sabotage the deal, citing concerns about the potential proliferation of the missiles to neighbouring countries.
In particular, the officials have said they fear the advanced weapons will eventually find their way to Egyptian soil. Egypt was the first country to sign a peace deal with Israel in the late 1970s.
Egyptian Foreign Minister Ahmad
Mahir (R) and Silvan Shalom
But Israeli analysts say such claims are "absurd" and "inconceivable" to say the least.
"The United States does not allow the transfer of American-made weapons from one party to another, and we are not speaking about rogue states who would do things like that," said Yiftah Shapir, a military analyst in the Tel Aviv-based Jaffee Centre for Strategic Studies.
"We are speaking about two countries - allies of the United States - who are very highly dependent on US funds and wouldn't dare to upset American administration. It is absurd to say that these weapons might be transferred to Egypt."
Shapir, who served as an officer in the Israeli Air Force, attributes the announcement to "internal political rivalries in the Ministery of Defence".
"My educated guess is that some members of Israel's defence ministry were notified about this deal but decided not to pursue any action because their professional assessment is that even if these missiles are being sold to Jordan they pose no real threat to Israel.
"Then suddenly it came to the table of Minister Mofaz and he decided on Israel's objection to the sale."
According to the report, the arms deal is already in its advanced stages, but Israeli officials are trying hard to stop it in its tracks. The Jewish lobby is said to be pressuring the American Congress to stall the sale of the weapons.
In response to the Israeli statements, Jordanian spokesperson Asma Khadr told Aljazeera.net no one - especially not Israel - can interfere with the Hashemite kingdom's right to defend herself.
Jordan will protect its right to
defend itself militarily
"Jordan has the right to defend herself under any circumstances, and to arm herself with whatever weapons will ensure her security, from any source we want," said Khadr.
"We absolutely oppose any attempts to sabotage this [arms] deal. No one has a right to oppose it, especially Israel, with whom we have a peace treaty," she told Aljazeera.net.
Khadr rejects Israeli claims that weapons may be resold to Egypt, saying the American-Jordanian arms deal is purely defensive in nature.
"Jordan does not agree to have anyone defend on her behalf," she said in reference to the Israeli diplomatic source's statement.
"The goal behind the new arms is to improve our defensive capabilities and better prepare our armies to defend Jordan."
American officials have expressed astonishment over the Israeli concerns, saying that Jordan poses no threat to Israel and this latest about-face may cause a rift in relations between the two countries.
This would be the first time Israel prevents the sales of arms to Jordan since the two countries signed a peace agreement in 1994.
The last deal between the two countries involved a contract to upgrade 17 F-16 jets, bought from the US army surplus, according to the Defence Security Cooperation Agency, the Pentagon agency in charge of all foreign arms deals.