It also distanced North Korea from the attack and called it a "grave political provocation".
"The hope is that military force would show Kim Jong-un that America is "serious" about stopping further nuclear development and trigger negotiations", the Telegraph reported.
The Telegraph cited "well-placed sources" - three of them, including "two former US officials familiar with current thinking and a third figure in the [Trump] administration".
The plans indicated that President Donald Trump is more willing to use military option than previously thought. Diplomatic efforts to quell the threats and denuclearize North Korea have failed to move the needle on the situation's urgency.
North Korea tested a nuclear weapon in September, its sixth and most powerful nuclear bomb test.
Earlier this week, White House Homeland Security Adviser Tom Bossert had blamed Pyongyang for the WannaCry cyber attack, claiming the accusations were based on inputs by United States and foreign intelligence agencies.
"WannaCry was indiscriminately reckless", the Homeland Security adviser emphasized.
The US is considering a limited strike on North Korea to give Kim Jong Un a metaphorical "bloody nose", The Telegraph reported, citing "well-placed" sources in the Trump administration.
How Kim would respond to such an attack is a mystery.
North Korea has launched 23 missiles since February. And now North Korea is vowing to retaliate.
Submarines like the USS Michigan, which has frequently visited South Korea during the recent North Korean crisis, could send a volley of cruise missiles at any military site in North Korea without ever surfacing. According to USA Today, on November 29, the DPRK launched a new intercontinental ballistic missile that it claimed could hit targets on the US mainland.