More than 16,000 asylum seekers will instead be resettled in Western countries, including Canada, Italy and Germany, Prime Minister Benjamin Netanyahu said.
About 16,000 others will be given permanent residency in Israel, he said.
Israel's Supreme Court had blocked deportations meant to begin on Sunday.
The plan to send the migrants to African countries - reported to be Uganda and Rwanda - was condemned by Israeli activists and sparked protests.
The new plan will be implemented over a five-year period. Mr Netanyahu's office described the agreement as "unprecedented".
"These understandings will allow the removal of more migrants from Israel than in the previous plan, and under UN and the international community's auspices," a statement said.
Canada, Italy and Germany are yet to officially confirm their participation in the agreement.
Where are the migrants from?
Most of the Africans are from Eritrea - a one-party state whose leaders have been accused of crimes against humanity by a UN inquiry - and war-torn Sudan.
Most of them entered from Egypt several years ago, before a new fence was built along the desert border. This has ended most illegal crossings.
How controversial is this issue?
The decision in January to offer the migrants a cash lump-sum and a plane ticket to leave Israel voluntarily or otherwise face forced expulsion was controversial in Israel.
Some critics in the country and among the Jewish community abroad - including former ambassadors and Holocaust survivors - saw the plan as unethical and a stain on Israel's international image. The UN refugee agency said it violated local and international laws, and large protests were held in Israel.
Mr Netanyahu said the opposition was "baseless and absurd" and that Israel would resettle "genuine refugees".
Activists, however, noted that only a handful of Eritreans and Sudanese had been recognised as refugees by Israel since the country took over the processing of applications from the UN in 2009.
How have people reacted?
Opposition leaders and activists in Israel hailed the new deal on Monday.
"I congratulate the activists who fought, campaigned and did not give up," said Avi Gabay, head of the Zionist Union, the largest opposition faction in the Israeli parliament.
Michal Rozin, a member of Israel's parliament and a lead campaigner against the expulsions, said the agreement represented the "success of the Israelis who protested against the evil of deportation".
But Shlomo Maslawi, a Tel Aviv city councillor who has organised protests against the presence of many African migrants in the south of the city, said the deal was a "disaster that will reverberate for generations to come".
A note on terminology: The BBC uses the term migrant to refer to all people on the move who have yet to complete the legal process of claiming asylum. This group includes people fleeing war-torn countries such as Syria, who are likely to be granted refugee status, as well as people who are seeking jobs and better lives, who governments are likely to rule are economic migrants.
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