'The Saudis have given their permission for the Israelis to pass over and they will look the other way,' the Times reported quoting US sources in West Asia.
'They have already done tests to make sure their own jets aren't scrambled and no one gets shot down. This has been done with the agreement of the (US) State Department,' the paper said.
The official Saudi Press Agency, however, dismissed the Times report, calling it 'false' and 'slanderous'.
'Riyadh rejects the violation of its sovereignty and the use of its airspace or territory by anyone to attack any country,' an unidentified official at the Foreign Affairs Ministry was quoted as saying.
Quoting defence sources in the Gulf, Times said, in the week that the UN Security Council imposed a new round of sanctions on Tehran, Riyadh agreed to allow Israel to use a narrow air corridor in the North to reach Iran.
Quoting sources in Saudi Arabia, the daily said that it was common knowledge within defence circles in the Kingdom that an arrangement is in place if Israel decides to go ahead to obliterate the Iranian nuclear facilities.
The daily said that despite the tension between the two governments, they share a mutual loathing of the regime in Tehran and a common fear of Iran's nuclear ambitions.
The defence sources said the four main targets for the Israelis would be the uranium enrichment facilities at Natanz and Qom, the gas storage development at Isfahan and the heavy water reactor at Arak.
Secondary targets for the Israeli jets could be the light water reactor at Bushehr, which could produce weapons grade plutonium, when completed.
The Iranian nuclear targets, defence sources said lie almost 2,250 km from Israel and could be out of reach of its bombers even with aerial refuelling. But an open air corridor across northern Saudi Arabia would significantly shorten the distance.
The Times, quoting defence sources in the Gulf, said the Israeli air force would have to carry out the attacks in multiple waves of bombers, crossing Jordan, Saudi Arabia and Iraq.
Israel, which regards Iran as its principal threat has refused to rule out using military option to prevent Tehran developing nuclear weapons.
In 2007, Israel was reported to have used Turkish air space to attack a suspected nuclear reactor being built by Iran's main regional ally, Syria.
This won't be the first time that Israeli fighters have overflown Saudi air space to strike. On June 7, 1981, Israeli air force F-16 fighting falcons flew over the kingdom to strike and destroy the Iraqi nuclear reactor at Osirak.
Reacting to the development, Mahmoud Ahmadinejad said: "Undoubtedly, the US and the Zionist regime are the enemies of Iran and Saudi Arabia, so they are trying to create a gap between Tehran and Riyadh."
During a meeting with Saudi Arabia's new ambassador to Tehran, he said: "If Iran and Saudi Arabia stand together, our enemies won't dare continue with their aggressive behaviour, with occupation and pressure on the Muslim world."