Four men were arrested over the conspiracy in July, which allegedly involved smuggling a bomb hidden inside a meat grinder onto an Abu Dhabi-bound flight.
The device never made it onto the plane, apparently because it was too heavy to pass check-in.
The Times of Israel cited a senior officer as saying Unit 8200 attached to the Israeli Intelligence Corps provided "exclusive intelligence" that led to the prevention of the attack.
Israeli Prime Minister Benjamin Netanyahu confirmed the report in a speech in Jerusalem overnight, according to Reuters.
"I can tell you that this is one of many, many such actions that we did preventing terrorism around the world," he said.
Home Affairs Minister Peter Dutton on Thursday said the federal government was grateful for information provided by Israel to ASIO, which in turn worked with other international partners.
"This Etihad flight was almost blown out of the sky and it would have resulted in hundreds of people losing their lives, so we are very grateful for the assistance Israel provided in that matter," he told Sydney radio 2GB.
The information led "directly" to dealing with the matter, Mr Dutton said.
"There's an enormous capacity they have within the intelligence-gathering space and it's an important relationship with ASIO and the Australian Federal Police."
Two of the arrested men, from Sydney's western suburbs, have each been charged with two counts of acting in preparation for, or planning, a terrorist act.
A third was charged with an unrelated weapons offence, while the fourth was released without charge.
Lebanon authorities in August said a man linked to those charged had moved to the IS stronghold of Raqqa in Syria and became a commander in the jihadist group more than 12 months earlier.
Mr Dutton said 14 imminent terror attacks had been stopped in Australia and 85 people have been charged with terror-related offences in recent years.
