The question given at the end of the body references both Israel and "Western powers." Using that broader category, the answer appears to be to a significant extent. According to an interview that Asia News International did with the NSO Group,
as reprinted in the Times of India, the company that produces Pegasus, the majority of their customers fall into this latter category.
ANI: In the list that has been published of countries affected by Pegasus, India is the only democracy mentioned. It has come as a shock to many of us...
NSO Group: The majority of our clients are Western democracies.
With respect to Israel, things are a little harder to determine, but it at least seems likely. One thing to note is that according to a Forbes article the founders of the firm are thought to have belonged to the Israeli security apparatus:
Co-founder Shalev Hulio had not responded to messages. Both are believed to be alumni of Israel’s famous Unit 8200 signals intelligence arm, as are many of the country’s security entrepreneurs.
As such, the situation may well be less that Pegasus is used by the Israeli intelligence services, and more that techniques and exploits that the Israeli intelligence services are willing to relinquish control over are employed by some security firms, including NSO Group.
Still, that said, as indicated later in the same article, some evidence has been found that the software was used within Israel, which could potentially indicate that the Israeli government used Pegasus directly:
The researchers later discovered Mexican journalist Rafael Cabrera had been targeted too. And looking at the domains registered by NSO, they determined Pegasus could have been used across Turkey, Israel, Thailand, Qatar, Kenya, Uzbekistan, Mozambique, Morocco, Yemen, Hungary, Saudi Arabia, Nigeria, and Bahrain, though there was no clear evidence.