Raja Pervaiz Ashraf denies accepting bribes when approving power generation projects as minister for water and power in 2010.
Analysts say that the move is unlikely to lead to his immediate removal.
It comes as populist cleric Tahirul Qadri led thousands of protesters in Islamabad, demanding the resignation of the government.
Television images showed protesters celebrating and triumphantly applauding as news broke of the court’s order.
It may just be a coincidence – but to many observers the timing of the move bolsters allegations that the cleric is backed by elements of the judiciary and military.
In recent years Pakistan’s government, judiciary and powerful military have been at loggerheads.
Raja Pervaiz Ashraf’s predecessor, Yousuf Raza Gilani, was forced out as prime minister last June after a court convicted him of contempt for failing to pursue another corruption case against the president.
Raja Pervaiz Ashraf was appointed in his place, but analysts predicted that his tenure would also be troubled.
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