The unit, called the Strategic Support Branch, is also operating in other places, the newspaper said.
A memo to Defence Secretary Donald Rumsfeld from the chairman of the Joint Chiefs of Staff, General Richard Myers, said the focus of the initiative was on “emerging target countries such as Somalia, Yemen, Indonesia, Philippines and Georgia”, according to the Post.
The unit gave the Defence Secretary broad authority over spy operations abroad, including prisoner interrogation and foreign spy recruitment, traditionally the domain of the Central Intelligence Agency (CIA).
A Senate committee will look into the alleged new unit, the existence of which would involve the reinterpretation of US laws.
Senate Armed Services Committee member John McCain told CBS television he would raise the question at hearings before the Senate Armed Services Committee.
He said the move was “a product of the frustration with the CIA”.
The unit, which has been operating for two years, deploys teams of case officers, linguists, interrogators and technical specialists with special operations forces, the Post said.
Defence Department spokesman Lawrence DiRita in a statement said there was “no unit that is directly reportable to the Secretary of Defence for clandestine operations as is described in The Washington Post article”.
“Further, the department is not attempting to ‘bend’ statutes to fit desired activities, as is suggested in this article.”
The statement said the war on terrorism necessitated “a framework by which military forces and traditional human intelligence work more closely together and in greater numbers than they have in the past.”
A CIA spokesman said the agency had no immediate comment.