A new hearing of a military appeals court is scheduled for Tuesday, the army said in a statement.
The decision to place the soldier under arrest at his base is seen as less serious than holding him in a military prison.
It follows a favourable ruling on Thursday, when military prosecutors announced that the 19-year-old soldier would be investigated for manslaughter, rather than murder.
Under Israeli law, manslaughter signifies an intentional but not premeditated killing.
Video of the soldier, whose identity is under a gag order, shooting the Palestinian in the flashpoint West Bank city of Hebron on March 24 spread widely online.
Filmed by a Palestinian volunteer for Israeli rights group B'Tselem, it showed a 21-year-old Palestinian -- who along with another man had allegedly stabbed a soldier minutes earlier -- lying on the ground, apparently after being shot.
The soldier then shoots him in the head without any apparent provocation. The Palestinian, Abdul Fatah al-Sharif, was killed.
Top military and government officials have strongly condemned the soldier's behaviour, but far-right politicians and protesters have reacted angrily to his arrest and demanded his release.
Israeli Prime Minister Benjamin Netanyahu, a former special forces officer, appeared on Thursday evening to walk a line between backing the military justice system and showing some empathy for the tough conditions soldiers face.
