Donald Trump hangs up a phone call with the leaders of Sudan and Israel as officials applaud in the Oval Office of the White House on Friday. AP

Sudan on Friday agreed to be the latest Arab nation to recognise Israel in a diplomatic coup announced by President Donald Trump days before US elections.

Trump announced the agreement by Sudan's year-old civilian-backed government moments after he formally moved to end the nation's designation of a state sponsor of terrorism, which was a major goal for Khartoum.

Reporters were escorted into the Oval Office where Trump was on speakerphone with Sudan's leadership and Israeli Prime Minister Benjamin Netanyahu, a close ally of the embattled Republican president.

"This truly changes the region. It changes the lives of our peoples for the better and allows us to focus on the task of building our nations, building our future," Netanyahu was heard telling Trump.

"We have at least five more that want to come in and we'll have many more than that soon," Trump said in a room packed with aides, few of them wearing masks despite the COVID-19 pandemic.

Until last month, the only Arab nations to recognise Israel were Jordan and Egypt - neighbours of the Jewish state that had made peace after US mediation.

Both the United States and Israel committed to boosting trade with Sudan, an impoverished, conflict-ridden nation that had faced years of criticism over its violent internal campaigns until the fall of dictator Omar al-Bashir last year.

In a three-way statement, Sudan and Israel said delegations would met "in the coming weeks to negotiate agreements of cooperation" including in agriculture issues, aviation and migration.

"The leaders agreed to the normalization of relations between Sudan and Israel and to end the state of belligerence between their nations," it said, without setting a date.

As part of the deal to get off the terror blacklist, the White House said that Sudan's transitional government had deposited $335 million to compensate survivors and family members of anti-US attacks that took place when Bashir's regime welcomed Al Qaeda.

Sudan's civilian prime minister, Abdulla Hamdok, thanked Trump over the terror designation without mentioning recognition of Israel - a step he had earlier said he was not empowered to take.

"This decision will open wide the door to Sudan's deserved return to the international community and the international financial and banking sector, as well as to regional and international investment," Hamdok's office said in a statement that did not mention ties with Israel.

But Sudanese TV later said Sudan had in fact agreed to end the state of war with Israel and normalize ties.

Also on the telephone call was Sudan's top general, Abdel Fattah al-Burhan, who met Netanyahu earlier this year in Uganda.

Agence France-Presse