The federal government earlier had asked the government of Punjab province to detain seven top Jamaat-ud-Dawa leaders of which, five were put under preventive detention while the others were to be netted shortly.
Chaudhry Imtiaz, the Deputy Commissioner of PoK capital Muzaffarabad, told the Dawn newspaper that police guards had been removed from Alvi's residence but he had been asked not to leave the area without informing the administration.
Alvi was put under house arrest in his Karyan village on Thursday night.
"He had been placed under house arrest for security reasons. He is still under surveillance and cannot leave the station without prior intimation to the authorities concerned," Imtiaz said.
He said four persons taken into custody from a workshop run by the Jamaat in Muzaffarabad had been released because they were "merely mechanics". Imtiaz said there were no instructions from the federal government to detain the 'regional or second-line leadership' of the Jamaat.
Earlier, Pakistan's foreign minister Shah Mahmood Qureshi confirmed that Jamaat-run seminaries and schools would continue to function as usual.