The overturn is set to apply from Saturday in Saxony and immediately in Baden-Württemberg.
"We will therefore no longer have such a ban during the autumn holidays," said Saxony's Social Affairs Minister Petra Köpping of the Social Democrats.
At the same time, Köpping called for adherence to coronavirus rules - such as social distancing and mask wearing.
Last week, Germany had called for a ban on overnight stays for people coming from coronavirus risk areas such as Berlin or parts of North Rhine-Westphalia.
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However, several states have opted out of the ban or even taken legal action against it.
Earlier on Thursday, a court in the southwestern state Baden-Württemberg overturned the rule as it found the encroachment on individual freedoms disproportionate.
According to a decision published as part of an emergency appeal to a court in Mannheim, the measure gets in the way of the fundamental right of freedom of movement and as such is “probably” unconstitutional.
On November 8th, the accommodation ban will be discussed at a countrywide level by Chancellor Angela Merkel and the 16 state premiers.
'Nothing to do with illness'
Saxony's Prime Minister Michael Kretschmer of centre-right Christian Democrats (CDU) had already said on Wednesday before the meeting with Chancellor Merkel and the heads of states in Berlin that he did not consider the ban appropriate.
It is not proportionate because "people are being hit who have nothing to do with illness," Kretschmer said on Thursday.
At the same time, Kretschmer expressed concern about the significant increase in infections.
READ ALSO: What are Germany's current domestic quarantine rules and hotel bans?
"It is therefore right that we should set out together to break this trend,” he said.
Kretschmer pointed to neighbouring Czech Republic, where the healthcare system is on the verge of collapse due to a record number of new daily infections.
“This (the situation in Czech Republic) should not happen here. But the approach has to be appropriate, reasonable and determined,” he said.
New rules in Saxony
At the same time, Kretschmer announced stricter rules to be introduced in a phased plan in Saxony. The first stage will take effect within seven days with 35 new infections per 100,000 inhabitants, when a curfew in the catering sector will kick in at 11 pm.
For 50 new infections, a ban on selling anything will apply at 10 pm and private parties will be restricted. Private parties are to be restricted. There will be no compulsory masks in the classroom at schools.
However, the state government will discuss in the next few days whether a face mask should be worn beyond shops and on public transport, for example also waiting at bus stops or when visiting public offices.
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