On Tuesday, he said the deal was being cancelled after having held discussions on it.
"After having heard numerous comments on the agreement, I have examined the pros and cons and have decided to cancel the agreement," Mr Netanyahu said in a statement.
The agreement was designed to end the possibility of forced deportations of thousands of migrants to Rwanda under a controversial plan put forward by Mr Netanyahu in January.
UN asks Israel to 'reconsider'
The UN on Tuesday urged Mr Netanyahu to "reconsider" his decision.
"UNHCR notes the announcement of Israeli Prime Minister Netanyahu that he has cancelled the Israel-UNHCR agreement of April 2nd on solutions for Eritreans and Sudanese living in Israel," a spokesman for the UN agency, William Spindler, told AFP in an email.
"We continue to believe in the need for a win-win agreement that can benefit Israel, the international community and people needing asylum and we hope that Israel will reconsider its decision soon."
Under the agreement with the UN, a minimum of 16,250 migrants would have instead been resettled in Western nations.
In return, Israel would grant temporary residency to one migrant for each one resettled elsewhere.
The presence of the primarily Sudanese and Eritrean migrants in Israel has become a key political issue.
Mr Netanyahu is already under heavy political pressure due to a string of graft probes.