Netanyahu said he had listened "attentively many comments on the agreement, and (.) after reassessing its advantages and disadvantages I made a decision to cancel it".
Anti-immigrant groups and politicians in Netanyahu's own party had criticized the agreement, with one leading politician saying it would create a "paradise for infiltrators".
Yesterday, countries indicated by Netanyahu as an example of a possible destination for migrants - including Italy and Germany - denied giving their consent to the agreement between Israel and the United Nations refugee agency.
The agreement had also included support services for the African migrants who would be staying legally in Israel, Spindler said, including vocational training to help them find employment beyond southern Tel Aviv.
Dozens of migrants and their Israeli supporters protested the suspension outside Netanyahu's office in Jerusalem and government offices in Tel Aviv, as he met with the neighborhood representatives.
As the meeting began, Education Minister Naftali Bennett, who leads the right-wing Jewish Home party, tweeted that the temporary halt was not enough.
The presence of the primarily Sudanese and Eritrean migrants in Israel has become a key political issue.
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The UNHCR in a statement confirmed an agreement was signed with Israel but did not name the countries that would accept the migrants.
A previous plan already underway for a mass deportation of some 20,000 migrants to Rwanda had led to legal challenges in Israel, drew criticism overseas and triggered an emotional public debate among Israelis.
In January, Netanyahu announced a "mission" to expel all illegal African migrants from the country.
At immigration hearings, migrants were told they could choose to go to Rwanda or Uganda.
Outside a government complex in Tel Aviv where Netanyahu said he was scrapping the deal, several African men wrapped themselves in chains in a protest that put their sense of powerlessness on display. He also noted that Israel, as the receiving nation, has only in a very few cases processed and officially designated the migrants as refugees.
Israel has canceled a deal reached with the United Nations that would have relocated thousands of African migrants to the West, just a day after announcing the plan.
They had initially been given a deadline of April 1, but Israel's supreme court suspended the plan on March 15 while it continued to examine it.
Since 2005 a total of 64,000 Africans had entered Israel illegally over its border with Egypt, although thousands have since left.