Ms Bhutto's residence has been sealed off by police
Scenes of protest
The move came as she tried to leave her Islamabad residence to join a planned rally in nearby Rawalpindi.
The United States has criticised the move saying that she must be "permitted freedom of movement."
Ms Bhutto has vowed to wage a campaign aimed at forcing President Pervez Musharraf to stand down as army chief.
Police in Rawalpindi clashed with members of Ms Bhutto's Pakistan People's Party (PPP) who were trying to defy a ban on rallies imposed under emergency rule.
A three-day detention order was served on the former prime minister after she tried to cross the heavy police cordon set up outside her home on Friday.
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Earlier reports said the order would apply for 30 days.
Speaking outside the house, in front of police barricades, she repeated opposition demands that Gen Musharraf should lift the state of emergency, resign as army chief and hold elections by mid-January.
"We are calling for the revival of our constitution and respect for our judiciary," she said.
"We are calling for General Musharraf to keep his commitment and retire as chief of army staff on 15 November."
The BBC's Chris Morris in Islamabad says Ms Bhutto's defiance raises the possibility of mass protests.
She had been intending to address a huge rally in Rawalpindi, but thousands of police were deployed to block the main roads.
White House concerns
The United States, which has been the principal backer of President Musharraf in his fight against pro-Taleban militants, was quick to criticise the restrictions on Ms Bhutto.
"Former Prime Minister Bhutto and other political party members must be permitted freedom of movement and all protesters released," US National Security Council spokesman Gordon Johndroe said.
"We remain concerned about the continued state of emergency and curtailment of basic freedoms, and urge Pakistan's authorities to quickly return to constitutional order and democratic norms."
Security threat
Ms Bhutto's Pakistan People's Party says thousands of its supporters have been detained in the past two days.
A small number of PPP activists tried to evade security by going to a planned rally in Rawalpindi through alleyways and side streets.
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But after a while a running battle started, with protesters throwing stones and police using teargas.
The authorities had banned the event, saying attackers were trying to target it.
Last month a suicide bomber killed nearly 140 people at a mass gathering as Ms Bhutto returned home from exile.
Pakistani deputy information minister Tariq Azim told the BBC that the opposition leader was being detained "for her own security".
Another minister said the three-day detention order might be lifted early.
Meanwhile in the city of Peshawar, police say a suicide bomber targeted the residence of the minister for political affairs, Amir Muqam.
They say two security personnel were killed, along with the attacker, but the minister is safe.
'Indispensable ally'
On Thursday Gen Musharraf pledged to hold parliamentary elections by 15 February - a month later than they were due.
He also renewed a promise to quit as head of the army, if and when the Supreme Court validated his recent election as president for another term.
However, Ms Bhutto dismissed his words as "vague" and "generalised".
Gen Musharraf announced his decision to hold elections after coming under pressure from US President George W Bush.
The general imposed a state of emergency on Saturday, blaming militant violence and an unruly judiciary.
On Wednesday, Mr Bush telephoned the Pakistani leader to urge him to call off the state of emergency and stand down as head of the army.
But he also noted that Gen Musharraf had been an "indispensable ally".
A media blackout is still in force. International channels like the BBC and CNN were allowed back on air on Thursday but have since been blocked again.
Former Prime Minister of Pakistan, Benazir Bhutto (center), speaks to supporters outside her house.
Former Prime Minister of Pakistan, Benazir Bhutto, surrounded by barb wire outside her house.
The government of Pakistan late on Friday has withdrawn the earlier detention notice and house arrest of former Pakistani Prime Minister Benazir Bhutto. Police had served her with a temporary detention notice and ordered her to serve 30 days of house arrest. Bhutto was not detained by the police.

The move came as Bhutto planned to attend a protest she organised today in Rawalpindi. She was stopped by troops who were ordered to surround and block off her home located in Islamabad. They then served her with a 30 day detention when she attempted to cross the blockade.

"I am trying to get out, as I want to go to Rawalpindi. I am in front of my house in my car. I have not been arrested and no arrest warrant has been served on me. Large numbers of policemen are present here and there are barb wire barricades and blockades in front of me," said Bhutto.

Police claimed that they are protecting Bhutto from a possible suicide bomb attack because "some suicide attackers have come to Islamabad," added Bhutto.

In Rawalpindi, protesters clashed with police who were enforcing a ban against public demonstrations. Bhutto has publicly announced that she will head a protest against the country's president, Pervez Musharraf, in an attempt to get him to resign as head of the country's military. A protest march from Lahore to Islamabad is scheduled for early next week.