The new plan will be implemented over a five-year period.
A spokesman for the Israeli government said: "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.”
Mr Netanyahu later told a news conference that for each migrant resettled overseas, Israel will give "temporary residence" to a migrant in Israel.
Avi Gabbay, the leader of the Zionist Union, the largest opposition grouping in the Israeli Knesset, congratulated the efforts of activists “who fought, campaigned and did not give up”.
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 Naftali Bennett, the leader of the Jewish Home Party, criticised the government’s announcement, describing it as “a total surrender to the false campaign in the media”.
Italy, Germany and Canada are yet to officially announce their involvement in the scheme.
