An 11-judge bench headed by the Chief Justice Iftikhar Chaudhry suspended Awan's licence when he appeared in court this morning to represent the government in a case for reviewing the death sentence awarded to former premier Zulfikar Ali Bhutto.
The bench said the action was being taken as Awan had failed to respond to a contempt notice.
The bench further said Awan's behaviour towards the apex court had been "inappropriate".
Awan had resigned from the post of Law Minister last year to represent the government in a reference filed by President Asif Ali Zardari that asked the apex court to review the death sentence awarded to Zulfikar Ali Bhutto.
The bench said the President should be informed that his counsel's license had been suspended and that the government should find a new lawyer.
Awan, a close associate of Zardari, has angered the apex court several time in the recent past by criticising its orders and making irreverent remarks about judges.
He was last month appointed the vice-president of the ruling Pakistan People's Party despite facing criticism within the party.
During today's proceedings, the apex court turned down Awan's request for more time to file a reply to the contempt notice.
The bench was of the view that 15 days had been given to Awan and this time was enough to file aresponse.