WASHINGTON—President Donald Trump renewed a waiver that keeps the U.S. Embassy in Israel in Tel Aviv instead of moving it to Jerusalem, the White House said Thursday.

Mr. Trump had promised on the campaign trail and during the transition that he would move the embassy in Israel to Jerusalem and recognize the city as Israel’s capital in what would be a major reversal of longstanding U.S. policy.

Mr. Trump faced a June 1 deadline to sign the waiver, or else be legally obligated to move the embassy under a 1995 law.

In a statement, the White House said Mr. Trump decided to sign the waiver to “maximize the chances of successfully negotiating a deal between Israel and the Palestinians, fulfilling his solemn obligation to defend America’s national security interests.”

The statement also said Mr. Trump remains committed to his promise to move the embassy. Mr. Trump will next have to decide whether to sign a waiver in six months.