The news of the arrest came as Islamabad was in the midst of a huge anti-corruption political rally led by a Pakistani-Canadian Islamic cleric, raising concerns about political stability in the country, CNN reported. Elections are scheduled after March when the current term of the civilian government of Ashraf and President Asif Ali Zardari ends.
CNN and local television channels reported the Supreme Court order resulted from allegations of kickbacks going back to when Ashraf had been water and power minister.
Geo News, quoting sources, said after the Supreme Court order Ashraf called a meeting of his ministers. The sources were quoted as saying he was waiting for the full text of the court order before talking to Zardari.
The Zardari government and the Supreme Court have not seen eye to eye in recent months in other cases related to graft. Ashraf became prime minister last year after the Court dismissed his predecessor, Yousaf Raza Gilani, following reopening of old graft cases against Zardari.
Fawad Chaudhry, an adviser to Ashraf, was quoted as telling a local broadcaster the latest court's decision is "a soft coup" against democracy, adding the prime minister has repeatedly denied the allegations, CNN reported.
Also Tuesday in Islamabad, thousands of protesters reached the Pakistani capital led by cleric Tahirul Qadri, who called on the government to step down, accusing it of corruption and incompetence. He called for setting up a caretaker government to bring about electoral reform prior to elections.
The cleric, who is a Canadian citizen, returned to Pakistan in December to push reforms.
The latest developments also come at a time when Pakistan is facing an unending wave of deadly sectarian, separatist, political and militant violence in its major cities, threatening its fragile democracy after decades of military rule.
Qadri had set a Tuesday morning deadline for the Zardari government to resign and caretaker government put in its place. Tens of thousands of people participated in his march to Islamabad from Lahore.
The BBC said television images showed Qadri's supporters celebrating and applauding as the news of the court order broke.
While the Qadri-led demonstrations and the court order might be unrelated, some observers told the BBC their timing could reinforce allegations the cleric has the support of elements in the judiciary and the military.