The central African country's cabinet decided against carrying out the deportations on after neighbouring countries spoke out against the plan.
The government had announced on Tuesday that it would next week begin expelling the nomadic Mahamid Arabs, who sought refuge in Niger from drought and warfare in Chad during the 1980s.
"The government has decided to suspend the operation," Oumarou Hadari, the communications minister, said after a cabinet meeting on Friday.
"There was intervention by certain neighbouring friendly countries."
Nigerien President Mamadou Tandja's government has said the operation was purely to tackle illegal immigration and it denied that Arabs were being targeted.
Arab population disputed
The government estimate only around 3,000 Mahamid Arabs live without residence papers in Niger.
Land-locked Niger sits on the southern edge of the Sahara
But community leaders say the nomads number tens of thousands and some local government officials put the figure are high as 150,000.
Niger accuses the Mahamid Arabs of possessing illegal firearms and of posing a threat to the security of local communities.
It says their camels have been draining water supplies - a serious cause of tension as the arid Sahel region suffers its worst drought on record, leading to increasing conflict between pastoralists and farmers for scarce resources.
Hadari said the government in Niamey had sent a delegation to the southeast region of Diffa to meet leaders of the Mahamid community on Friday.
Nigerien Arab leaders have welcomed the government's decision to halt the deportations.
Nigeriens have to compete with Arab refugees for land and water
"We are grateful to the government for cancelling this decision, in order to avoid problems between communities," said Sileyim Ben Hameda, an Arab member of parliament for the Diffa region.
In recent days, security forces carried out house-to-house searches and scoured the scrubland for nomads without proper identity papers, who were taken to the town of Kabelewa near the Chadian border to be deported, military sources said.
The expulsion of the Arabs back to Chad had been due to begin next week, the sources said.
Political analysts had warned the expulsions could have a destabilising effect on Chad, which is fighting a long-standing insurgency in its east which flared again this week.