The newspaper, citing "Western officials with knowledge of the effort," said the sophisticated malware was designed to spy on Iran's computer networks and send back intelligence used for an ongoing cyberwarfare campaign.
The Post said the US National Security Agency and CIA worked with Israel's military on the project.
A number of reports had linked Israel and the United States to Flame and another virus called Stuxnet which caused malfunctions in Iran's nuclear enrichment equipment.
US officials have not publicly discussed the matter except to say that they are focused on cyber efforts as part of defense and intelligence.
"This is about preparing the battlefield for another type of covert action," one former high-ranking US intelligence official told the Post.
The Russian security firm Kaspersky, first credited with discovering Flame, said last week the malware had strong links to Stuxnet.
Kaspersky said its research shows the two programs share certain portions of code, suggesting some ties between two separate groups of programmers.
The New York Times reported June 1 that President Barack Obama accelerated cyberattacks on Iran's nuclear program and expanded the assault even after the Stuxnet virus accidentally escaped in 2010.
The cyberattack, aimed at preventing Iran from developing nuclear weapons and keeping Israel from launching a preventive military strike, sowed widespread confusion in Iran's Natanz nuclear plant, the Times said.
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