The dossier, which was also seen by IBTimes UK sister publication Newsweek, claims that Russian experts have extracted radioactive waste from a bunker at the Donetsk state chemical plant and transported it to a rebel base.
The experts are allegedly working on combining the hazardous material with explosives to create a dirty bomb.
The details in the report were supposedly uncovered through hacked emails between rebels and radio communication interceptions and field operatives, The Times reported.
Three of the messages are claimed to be between the self-proclaimed Donetsk People's Republic (DPR) leader Alexander Zakharchenko and the rebel group's top officials.
One message from a rebel commander allegedly boasts that "the DPR will soon have an atomic weapon", and, in another message, Zakharchenko supposedly instructs the commander in charge of the chemical plant to expect "specialists from the Russian Federation" between July 2 and July 18, according to the Times.
"The DPR plans to use the radioactive material to create a dirty bomb with which it can blackmail the international community and the government of Ukraine," Vasily Hrytsak, chief advisor to the director of the Ukrainian secret service (SBU), said.
"It is possible, because the Donetsk state chemical plant and sources of ionising radiation are located on territory that is under the control of DPR terrorists."
The factory at the centre of report is on the pro-Russian rebels' side of the frontline in the conflict.
The bunker complex where the 12 tonnes of radioactive waste was stored is 10ft underground, encased by lead and sheltered by reinforced steel and concrete.
Removing the radioactive waste would require breaking through the lead and concrete layers, and handling the dangerous material with specialist equipment.
When the accusations were put to an unnamed DPR official, he initially denied that the factory stored radioactive waste, but eventually admitted to its existence, The Times reported.
"Everyone knows that there is a small repository with [radioactive] waste," he said. "But the story that we signed an agreement with Russia is fake."
Russia's state-owned nuclear agency Rosatom denied that its staff had travelled to Donetsk and challenged the idea that radioactive material was being stored in the area.
However, a spokesman did acknowledge that there were private companies and individuals in Russia capable of removing the material from the bunker.