"We are practicing our full sovereignty on our land", King Abdullah II said Sunday, announcing the Kingdom's intention to opt out of parts of the peace treaty which permitted Israelis to use 405 hectares of their farmland.
Abdullah said he had informed Israel of his decision.
Prime Minister Benjamin Netanyahu said on Sunday that Israel would start negotiations aimed at extending the lease.
The land was leased to Israel for a 25-year renewable period under annexes of the 1994 peace deal that lay down a one-year notice period, with Jordan retaining sovereignty. He told senior Jordanian politicians the kingdom wanted to exercise its "full sovereignty" over the two areas, Petra state news agency said.
He added, "Baqura and Ghumar have always been at the top of our priorities, and we have made a decision to put an end to the application of the peace treaty annexes regarding Baqura and Ghumar".
A Jordanian flag flies on a bridge leading from Israel to Jordan, in the Jordan valley area called Baqura, Jordanian territory that was leased to Israel under the 1994 peace agreement between the two countries, Monday, Oct. 22, 2018.
The original peace agreement stipulates that the 25-year lease could be renewed by both parties after 25 years, but that both sides had the option to abandon the deal, subject to an announcement one year prior to termination, which is set to occur in 2019. The leases expire next year.
Several demonstrators also demanded Jordan to cancel the entire peace treaty with Israel. However, Israel-Jordan relations have been strained in recent years, particularly due to Amman's stance on the issue of Jerusalem. "Historically speaking, the relationship between Israel and Jordan has existed for many years, and, simply put, Jordan can not exist without Israel".
They have also been expanding economic ties in the past year including a major deal to export billions of dollars of Israeli gas to the kingdom through a pipeline that crosses their northern borders.
But the peace treaty with Israel is unpopular and pro-Palestinian sentiment widespread in Jordan.
It is unclear how and when the territories will be returned back to Jordan's ownership. An incident previous year in which an Israeli security guard killed two Jordanian citizens within the Israeli embassy compound added to the tension.
Israel and Jordan reached an agreement to end the diplomatic fight in January, when a Jordanian government spokesperson said he had received from Israel an "official memorandum" apologizing for the deaths of the two Jordanians, as well as for the killing of a Jordanian judge in a separate incident in 2014.
Under the treaty, Israel retained private land ownership and special travel rights in Baquora in the northwestern part of the kingdom and Ghumar in the south. He dismissed the possibility that Jordan might pull out of other parts of the broader peace treaty.