Uruguay has expelled a senior Iranian diplomat over last month's planting of a dummy bomb near Israel's embassy in Montevideo, Haaretz reported on Friday.

Citing an unidentified "senior official in Jerusalem," it said the diplomat was expelled two weeks ago, and although Uruguayan officials briefed Israel on the move they made no public announcement, reports AFP.

"Investigations carried out by Uruguay's intelligence services after the discovery of the device yielded information pointing to a possible involvement of someone at the Iranian embassy," the report revealed.

It noted "the Uruguayan government turned to Iran's government for information and after consultations between the two, it was decided to expel one of the senior diplomats at Iran's embassy."

The Foreign Ministry declined to confirm or deny the report. "I am aware of it but I have nothing to add," a spokesman told AFP.

On January 8, Montevideo bomb squad officers detonated what turned out to be a fake bomb near the Israeli embassy, located in the World Trade Center office complex in the city.

The convincing-looking fake - complete with fuse, detonator and other elements found in a real bomb - was detected some 70 meters (230 feet) from the building by bomb-sniffing dogs.

After destroying the device, bomb brigade Lieutenant Colonel Alfredo Larramendi told reporters that it "never posed any danger" but might have been part of a dress rehearsal for the real thing.

"It might have been put there to see the response time" of responders, or to size up the quality of the security of Israel's embassy," Larramendi said.

Iran has a long history of sponsoring attacks against Israel around the world, using its proxy terrorist groups Hezbollah in Lebanon and Hamas
in Gaza.

"Iran and Hezbollah have a well-established terrorist infrastructure in South America, based on Shi'ite Lebanese migrants," Haaretz wrote.

In 2013, Argentine prosecutor Alberto Nisman revealed that Iran opened secret intelligence stations in several South American countries to plan and conduct terror attacks.

Nisman was found dead in his apartment with a gunshot wound to the head last month on the eve of a congressional hearing at which he was expected to accuse President Cristina Kirchner of covering up Iranian involvement in a 1994 bombing at a Buenos Aires Jewish center.

The bombing killed 85 people and wounded 300, the deadliest such attack in Argentina's history.