They had been trained to assassinate Saddam using guided missiles after the Iraqi leader left the home of his mistress in northwestern Iraq, said the paper.
This "window of opportunity" was discovered by the Mossad, which learned that when he visited his mistress, Saddam followed a predictable pattern.
He would usually arrive around dusk and visit relatives in the area before arriving at her home. In the morning, he would travel to a nearby secret military site.
But the key to the success of the operation was the Mossad's claim to have a source who knew in advance when Saddam would visit his mistress.
"If the accounts of Saddam's routine were correct," said the paper, "then for 15 to 20 minutes between leaving her and arriving at the military site, he was vulnerable."
Saddam's movements are shrouded in secrecy and are known only to his inner circle, mostly family members.
To mask his movements, the paper continued, dinner is prepared each evening at more than a dozen safe houses, with Saddam choosing his residence for the night only at the last minute. To complicate the issue even more, he uses look-alikes to spread confusion.
To confirm the quality of its information, a Mossad agent infiltrated Iraq, surveyed the location and returned with good-quality photographs of Saddam. After Mossad head Amiram Levine convinced Netanyahu that the intelligence was sound, officials decided to formulate a plan to kill the Iraqi leader.
This is not the first Israeli plan to assassinate Saddam, according to the report. An operation, code named Bramble, was developed by former Prime Minister Yitzhak Rabin and former army chief of staff Ehud Barak, now Labor Party leader.
The plan was revived early last year and, with the appointment of Levine, preparations began for the new plan, called Bramble-II.
The commandos have been ordered to continue their preparations and remain on standby, but the paper said the plan will almost certainly be shelved now that it has been revealed.
It adds that details of the operation were leaked "because military intelligence analysts believed the assassination of Saddam would irreparably damage the Middle East peace process and Israel's future relations with Arab countries."