One suspect confessed the group had been planning simultaneous attacks on various mosques during Friday prayers, the Maariv daily newspaper said on Tuesday.
The group apparently planned to detonate several car bombs where Muslims were congregating in order to kill as many people as possible.
The sacred mosque of Al-Aqsa in occupied Jerusalem was reportedly a planned target.
Members of the group also reportedly confessed to the murder of at least eight Palestinian civilians, including a three-month-old baby near Hebron two years ago.
Under interrogation by the Shin Beth domestic security service, the unnamed suspect also indicated the group was planning attacks on Israeli political leaders.
“I’m not talking (merely) about spying on or hurting Arabs, and that should indicate what I’m talking about,” he was quoted as saying.
The paper said the suspect, already indicted as an accessory to murder, had also given details of where weapons had been stored and the names of members of underground cells.
The group planned to detonate several car bombs where Muslims were congregating
His answers under questioning led to the arrests of alleged radicals – but they were later freed as his testimony was full of contradictions, the paper reported.
The report comes days after a Jewish settler, Shahar Dvir Zelinger, was charged with belonging to a “terrorist network” suspected of masterminding anti-Palestinian attacks.
The prosecution accused Zelinger of belonging to a “terror cell” and storing weapons stolen from the Israeli army, but did not charge him with direct involvement in attacks.
‘Bible condones killings’
Israeli media also reported on Monday that members of the Jewish armed group – apparently linked to the radical Gush Emunim movement – were convinced the Jewish Bible supported the killing of non-Jewish women and children.
At least nine Palestinians have been shot dead in the West Bank since November 2001 in attacks claimed by Jewish armed groups such as the Revenge of the Children organisation.
Since July 2003, Shin Beth has arrested 13 settlers suspected of involvement in such attacks and announced that a Jewish “terrorist network” had been dismantled.
But nine of the suspects have since been released owing to lack of evidence.
A plot by Jewish groups to bomb
History of violence
In 1980, Jewish extremists sought to carry out a bombing attack on the Dome of the Rock Mosque in Jerusalem.
However, the attempt was foiled by Israeli police.
Two years later, they attacked the Hebron University campus, killing two students and wounding scores others.
The perpetrators were eventually pardoned by former Israeli President Haim Hertzog.
In 1994 a former American immigrant settler, Baruch Goldstein, gunned down 29 Arab worshippers as they were engaged in the dawn prayer at the Mosque of Ibrahim in Hebron.
Today his grave in the settlement of Qiryat Arba is a place of pilgrimage for extremists.