Formerly focused on protecting US bases and military operations, Pentagon intelligence collection inside the United States has already expanded to cover broader terrorist threats to the country, the Post said on Sunday.
However, proposed moves to expand the military's domestic intelligence activities in the wake of the attacks of 11 September, 2001, have sparked worries among politicians and civil liberties advocates that such activities could go out of control, the newspaper said.
"We are deputising the military to spy on law-abiding Americans in America. This is a huge leap without even a (congressional) hearing," Senator Ron Wyden told the daily.
According to the Post, the White House is considering expanding a secret Pentagon security agency into one which could investigate a range of domestic crimes, for which the government has used the FBI in the past.
The little-known Counterintelligence Field Activity has a secret budget but is thought to have 1000 people on its staff, the paper said.
A recent high-level presidential commission "urged that CIFA be given authority to carry out domestic criminal investigations and clandestine operations against potential threats inside the United States," the Post said.
CIFA's expansion would build on post-9/11 efforts to break down data-sharing barriers between the domestic intelligence operations of the FBI and its international counterpart, the CIA.
Lack of information-sharing by the FBI, CIA and the Pentagon was a factor in the success of the attacks on New York and the Pentagon in 2001.