Trump is calling for the 2015 Iran deal to be strengthened and has ordered 14 separate sanctions to punish the country over its human rights abuses, including in response to recent protests. These are separate to the nuclear deal.
The President has argued that the deal makes the US look weak but is allegedly willing to waive the sanctions in order to toughen the terms of the agreement.
The decision to waive the sanctions was to be announced in a statement issued by the White House a day after Trump engaged in lengthy discussions with US Secretary of State Rex Tillerson, national security adviser H.R. McMaster and others about the deal.
Mr Trump said: “Despite my strong inclination, I have not yet withdrawn the United States from the Iran nuclear deal.
“Instead, I have outlined two possible paths forward: either fix the deal’s disastrous flaws, or the United States will withdraw.”
The agreement, signed by President Obama in 2015, saw economic sanctions waived in return for Iran not developing nuclear weapons.
President Trump has been an outspoken critic of the agreement even before he took office, branding it the “worst deal ever” during his 2016 election campaign and vowing to scrap it if he became President.
Officials in Britain and the EU will likely welcome the news having fought hard to convince Trump to keep the deal in place.
Britain, France and Germany called on Trump on Thursday to uphold the pact. French President Emmanuel Macron stressed to Trump in a telephone call on Thursday the importance of abiding by the deal.
Iran, despite repeatedly claiming its nuclear programme is only for peaceful purposes, has vowed to “shred” the deal if Washington pulls out.
In October, Trump accused Iran of “not living up to the spirit” of the agreement even though the International Atomic Energy Agency says Tehran is complying.
Congress is split on the issue – hardline Republicans are urging the President to reimpose suspended sanctions and bring an end to the deal, while some liberal Democrats want to make it difficult for Trump to withdraw from the deal without congressional consent.