The newspaper said this has led to claims that Terre'Blanche was involved in a sexual relationship with his alleged killers, 28-year-old Chris Mahlangu and a 15-year-old boy.
Terre'blanche's body was found by detectives with his pants pulled down and his genitals exposed.
The newspaper reported that investigators placed the condom, and its content, in a crime kit, to be sent for forensic testing and will reveal the identity of Terre'Blanche's sexual partner.
One of the charges made against the alleged killers during court proceedings this week was of crimen injuria.
At the time prosecutor George Baloyi explained the charge of crimen injuria as: ".... they pulled down his [Terre'Blanche's] pants to his knees and exposed his private parts".
On Saturday, Mthunzi Mhaga, the spokesperson for the National Prosecuting Authority told the newspaper no further comment would be made on the charge.
"We've said enough. And that is that (the charge) is because Mr Terre'blanche's pants were pulled down to his knees and his private parts were showing. All other evidence will be presented at the trial."
Johannesburg lawyer Zola Majavu, who represents the minor, would neither confirm nor deny to the Saturday Star the discovery of the condom on the murder site.
AWB leader Steyn van Ronge at first told the newspaper that he "can't comment" on the alleged discovery of a used condom at the scene.
Later he told the newspaper that he was not aware of the condom discovery.
"If evidence is presented to support that, I will make a comment," he then said.
It was previously reported that Terre'Blanche had bought whisky and several bottles of cider on the day he was murdered.
The Saturday Star reported that there were claims that Terre'Blanche was seen on the morning of his murder at a bottle store with his two alleged killers.
Along with the crimen injuria charge, farmworker Mahlangu, and the minor, have been charged with murder, house breaking and robbery with aggravating circumstances and attempted robbery with aggravating circumstances.
The case was postponed to April 14. The two had not yet pleaded to the charges.
Right wing leader Terre'Blanche was murdered at his farm outside Ventersdorp a week ago.