The other answers are correct. This has to be reported. Doing so both protects yourself from accusations of plagiarism and protects the value of your degree. An institution that allows academic fraud quickly gets "a reputation."
Other answers have suggested that wholesale copying means that the plagiarist had access to an electronic copy, and that's quite likely. However, that does not indicate that the plagiarist was aided by someone in authority. Isn't your doctoral thesis available electronically in a database like ProQuest or one operated by your university library?
The real question is not whether to report; you have to. It is how to report. The question says, "I suspect that my PhD supervisor also had a role to play in this." That would be bad. My guess, based only on what's in the question, is that it was a passive role; your supervisor either didn't recognize the plagiarized text or chose not to do anything about it. You don't want to antagonize your supervisor by going over his or her head, but neither do you want to give the supervisor a chance to choose independently to do nothing about the matter.
So, pick someone in authority, like a department chair, dean, or university ombuds. Write to that person and your supervisor in the same message. Request a meeting with the two of them. Explain that the purpose of the meeting is that you have come to believe that a portion of your doctoral thesis has appeared unchanged in another student's master's thesis. Go to the meeting armed with the proof.
Most important, do not accuse your supervisor, who will surely deny complicity and will in any case be embarrassed at not having caught the plagiarism. Just present the facts and let others decide what, if anything, should happen to the supervisor.
There are three potential outcomes. First and best is that appropriate action is taken against the plagiarist. Second, the university either recognizes the problem but declines to take action or decides there really is not a problem; the latter seems very unlikely. Finally, your request for a meeting could be declined.
In the case of no meeting, you probably want to insist on seeing individually someone other than your supervisor so that you get your case on record. In the case of no action, you will have to decide whether to escalate to a higher authority in the university.