A Soviet-era document suggests the President of the Palestinian Authority, Mahmoud Abbas, worked for the KGB in the early 1980s.
Mr Abbas was listed as an "agent of the KGB" in a report smuggled to the UK by defector Vasily Mitrokhin, according to Gideon Remez and Isabella Ginor.
The president's spokesman described the claim as an absurd Israeli "smear".
It comes as Russia attempts to organise a meeting between Mr Abbas and Israeli Prime Minister Benjamin Netanyahu.
The Palestinian leader said earlier this week that he had agreed to see Mr Netanyahu in Moscow on Friday, but that Israeli officials had asked to delay until an unspecified later date.
The two men shook hands last year at a global climate change conference in Paris, but have not attended substantial public talks since 2010.
'Mole'
Mr Remez and Ms Ginor told Israel's Channel 1 television that Mr Abbas was named in a document they had found in the Mitrokhin Archive, stored at the University of Cambridge's Churchill Archives Centre.
The document, which the Churchill Archives Centre confirmed was authentic, is entitled "KGB developments - Year 1983" and Mr Abbas identifies him by the codename "Krotov" or "mole".
"'Krotov' - Abbas, Mahmoud, born 1935, origin Palestine, member of the executive committee of Fatah, PLO, Damascus, agent of the KGB," says the brief entry.
Mr Abbas was born in 1935 in what was then British mandate of Palestine. After the creation of the State of Israel in 1948 his family fled to the Syrian capital, where he was educated.
He founded the Fatah movement with the late Yasser Arafat in 1959 and became a key figure in the Palestine Liberation Organisation (PLO) after its creation in 1964.
Although the biographical details are correct, the BBC's Thomas Fessy in Jerusalem notes that the document does not say how and when Mr Abbas would have been recruited, whether he was paid, and how long he might have worked for the KGB.
"We can confirm that the image was from here and is in our MITN 2/24 page numbered 47 in our volume (page 48 in pdf of whole file)."
An adviser to the president told the BBC the allegation was made up by Israel.
He said Mr Netanyahu remained reluctant to meet Mr Abbas in a potential new round of peace talks organised by Russian President Vladimir Putin, himself a former KGB staff member.
Palestinian officials also said the PLO was openly working with Moscow in the early 1980s. Mr Abbas, they added, did not need to be a Soviet agent to liaise with it.