The Yeddyurappa"s decision comes against the backdrop of a raging controversy in the state over illegal mining and export of iron ore.
Yeddyurappa told reporters that the ban will be in force till the completion of a state Lok Ayukta probe into illegal mining in the last 10 years, between 2000 and 2010.
According to data provided by Yeddyurappa to the state assembly, between 2000 and 2010, over 30 million tonnes of iron ore was illegally mined and exported from Karnataka.
Yeddyurappa has rejected handing over the probe to CBI saying it will only delay the findings and credibility of the agency is in doubt.
Earlier he had banned issue of permits for transporting iron ore for exports.