"I think you can get a better deal. The one I would have is to reduce Iran's nuclear capabilities so you increase the breakout time," the Israeli leader told NBC television.
"I mean, if I had a vote on that negotiating team, I would say zero centrifuges," he said, when asked about reports that the Islamic Republic might be left with about 6,000 centrifuges.
The highly sophisticated machines spin uranium gas at supersonic speeds to make it suitable for power generation as well as for use at high purities for an atomic bomb.
Pressed by NBC on whether he would accept some centrifuges, Netanyahu replied: "I would say that a smaller number would be something that Israel and its Arab neighbors wouldn't love, but could live with."
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"The most important thing is that the lifting of restrictions on Iran's nuclear program would depend on Iran's change of behavior. That it would stop supporting terrorism, stop its aggression against just about every country in the region, and stop calling and threatening the annihilation of Israel."
But US officials shot down the report. Deputy Secretary of State Tony Blinken told lawmakers: "My understanding is that there is no draft, that that report is erroneous."
Iran and the United States, China, Russia, Britain, France and Germany are in talks to try to agree by March 31 on the outlines of a potentially historic deal and finalize it by the end of June.
Netanyahu had angered the US administration by giving a passionate speech earlier this month to Congress, blasting the deal under negotiation.