The first major domestic policy reversal of the Republican president's new term came after one federal judge had temporarily blocked the freeze and before another judge was due to hear a separate legal challenge. The proposal had thrown the federal government into chaos and disrupted payments to medical and child-care providers.
Separately, the White House said Trump will target pro-Palestinian student protesters for deportation in a sign that he is broadening his immigration crackdown to include people based on their political views.
The White House said Trump will sign an executive order that would revoke student visas for college students and other non-citizens who took part in anti-Israel protests that roiled college campuses last year.
"We will find you and we will deport you," Trump said in a statement. Trump has been a vocal supporter of Israel during its war with Hamas.
Trump's immigration crackdown until now has focused on deporting migrants who don't have a legal basis to stay in the United States. This order, if implemented, would target those who are in the country legally.
It was the latest boundary-pushing move for a president who has moved quickly to assert power since taking office on Jan. 20. He has halted wide swaths of foreign aid, pardoned supporters who attacked U.S. Capitol police and offered buyouts to thin the ranks of civil-service workers.
Trump also will seek to cut off federal aid to public schools that teach critical race theory -- a concept that racial bias is baked into U.S. institutions -- White House spokesperson Karoline Leavitt said on Fox News.
Democrats in Congress say Trump has repeatedly broken the law since returning to power, but his Republican allies have shown little interest so far in defying him.
The Republican-controlled Senate has confirmed all of his appointees so far, even Defense Secretary Pete Hegseth who squeaked by in a 51-50 vote after facing accusations of sexual assault and alcohol abuse. Hegseth has moved aggressively to implement Trump's agenda by banning transgender troops and diversity programs.
Republican loyalty is being tested by Trump's pick for health secretary, Robert F. Kennedy Jr., who holds unorthodox views that could alienate both liberals and conservatives.
At a contentious confirmation hearing on Wednesday, the former Democrat came under attack for his anti-vaccine views. But most Republicans at the hearing appeared to support him.
Other nominees have encountered less resistance.
Trump's attorney general nominee Pam Bondi won approval from a Senate committee, clearing the way for a confirmation vote.
Trump loyalists have already remade the Justice Department, firing lawyers who worked on his two criminal prosecutions and sidelining dozens of senior nonpartisan officials.
His pick for Commerce Secretary, Howard Lutnick, faced a largely friendly reception from lawmakers as he echoed Trump's support for tariffs and his complaints about Canada's trade practices.
REPUBLICANS DEFEND SPENDING FREEZE
Republican lawmakers said they were unfazed by Trump's attempt to freeze hundreds of billions of dollars in aid, a dramatic move that would undercut Congress' control over the $6.75 trillion federal budget.
Trump has said he has the power to refuse to spend money for programs he doesn't like, though legal experts say that could violate the U.S. Constitution.
"I, for one, am glad to have a president in the White House who is delivering on his promise to get our fiscal house in order," said Tom Emmer, the No. 3 Republican in the House of Representatives, at a retreat in Miami.
The spending freeze threw the government into chaos as the White House ordered 55 federal agencies to examine more than 2,500 grant programs in an effort to cut off support for diversity programs and other policies opposed by Trump.
A federal judge in Washington blocked the freeze from taking effect until at least Feb. 3, siding with advocacy groups who sued to block it.
Another federal judge was due to consider a separate lawsuit from Democratic state attorneys general at 3 p.m. ET (2000 GMT) on Wednesday.
Even though it did not take effect, Trump's order appeared to shut down payments for those who depend on federal aid to cover their expenses.
The Medicaid health plan for lower income Americans had resumed payments on Wednesday, according to an association of state agencies.
The payment system for housing authorities was still not functioning, said Democratic Senator Patty Murray.
"The chaos, I’m here to tell you, has not died down this morning,” Murray said at a press conference. “We will fight this in the courts, yes, but President Trump needs to back down from this reckless order that is hurting Americans and just follow the law as Congress wrote it.”
