The Israel Hayom newspaper said the number of reservists on active duty is expected to decline from about 60,000 to around 50,000, reflecting growing strain on the military's budget, Anadolu Agency reported.
It added that a final decision has yet to be made and is expected in the coming days.
According to the report, the move comes as Israel's military faces a severe funding crisis following an unprecedented surge in military spending, resulting in a budget shortfall estimated at tens of billions of shekels.
Israeli media, including Yedioth Ahronoth and Calcalist, reported that the planned reductions would affect reservists serving in the regional defense system, including personnel assigned to protect illegal settlements around the Gaza Strip and the occupied West Bank, as well as staff at military headquarters.
The reports said the planned cuts coincide with deep disagreements between Israel's defense and finance ministries over the size of the defense budget.
While the military establishment is seeking a record increase in defense spending as the army is engaged in multiple regional conflicts, the finance ministry has opposed such demands over concerns they would widen the budget deficit.
According to the Israeli media, the two sides have reached a temporary compromise under which additional funding would be provided on condition that the military reduce its reliance on reserve forces and cut operational expenditures.