The country initially announced it would be seeking a new candidate for ambassador, effectively ending the eight-month standoff, but later reversed its position.
Brazil has refused to accept the nomination of Danny Dayan, selected by Prime Minister Benjamin Netanyahu last August.
Israel's government had dug in its heels, refusing to suggest an alternative candidate, but early today announced it had invited new applications for the post.
"The foreign ministry human resources department has published today a tender which is addressed to the Israeli diplomats here at the foreign ministry, for the position of ambassador in Brasilia," foreign ministry spokesman Emmanuel Nahshon told AFP.
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He blamed an "unfortunate bureaucratic mistake", declining to give further details.
"Danny Dayan is still Israel's appointed ambassador," he said.
Dayan reacted to the mix-up by saying he had "regretted" that Israel had apparently backed down.
"For about an hour I was personally happy that I had been released from the quite embarrassing situation in which I find myself (but) I regretted that the state of Israel had given in to the boycott," he said on Twitter.
"Now it has become again the opposite."
Brazil's government reportedly opposed Dayan because of his opposition to a Palestinian state and because Israel failed to consult over its choice.
Dayan headed the Yesha Council of Jewish settlements in the occupied West Bank between 2007 and 2013.
Brazil recognised Palestinian statehood in 2010.
Jewish settlements in the occupied territories are illegal under international law and seen as major stumbling blocks to peace efforts.