Reports from Israel say Nauru was given a sewage treatment plant just two weeks before the United Nations vote condemning the US recognition of Jerusalem as Israel's capital.
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The Yedioth Ahronoth newspaper said the Israeli Foreign Ministry's Tenders Committee approved the outlay of $US72,000 without calling a tender.
It said the deal was approved by a special committee headed by the Foreign Ministry Director-General, the ministry's legal adviser and its accountant.
Yedioth Ahronoth also said the president of Nauru Baron Waqa had appealed to the prime minister Benjamin Netanyahu, asking to receive aid in the form of a sewage treatment plant.
In the UN General Assembly, Nauru was one of nine countries opposing last month's resolution, which was approved by 128 countries.
Siding with Israel and the United States were four Pacific Island countries: the Marshall Islands, the Federated States of Micronesia, Nauru and Palau.
The only other support came from Honduras, Guatemala and Togo.
To encourage developing countries to vote for Israel at the UN, Mr Netanyahu reportedly plans to start a fund of $US50 million.