The driver was shot dead; Netanyahu set to discuss outbreak of violence at White House.
The 23-year-old's citizenship will be revoked.
Secretary of State John Kerry hailed Jordan's "excellent suggestion."
Diplomatic efforts to try to end a surge in violence in Israel resumed in Jordan.
The Palestinians' unrest has been stirred in part by anger over what they see as increased Jewish encroachment on the mosque compound.
The rampage took place at the central bus station in the southern Israeli city of Beersheba.
Israel's cabinet also imposes more security measures after further Palestinian stabbings.
At least 40 Palestinians and seven Israelis have died in recent street violence.
Four Israelis and 24 Palestinians, including eight children, have died.
Israeli troops shot dead six Palestinians and a knife-wielding Jewish man wounded four Arabs on Friday.
At a high-stakes meeting at Camp David this week, the president will meet with leaders of the Gulf Arab states.
The Congressional Black Caucus may decide whether Obama's critics nix a nuclear deal with Iran.
Complaint by Joint List to Israel's Attorney-General to be submitted on charges of incitement and racism.
Benjamin Netanyahu's disavowal of the two-state solution could lead to a shift in U.S.-Israeli ties.