The CBI chief had earlier been sent "on leave".
The decision to this effect was taken by the prime minister-led appointments committee on Tuesday night.
Commenting on Twitter, Prashant Bhushan said, "Read this detailed & documented story on Nageshwar Rao appointed as acting Director CBI by illegally removing the present Director".
Jaitley said on Wednesday that the government's decision to remove the CBI's two top officers was based on the Central Vigilance Commission's (CVC) recommendations.
The unprecedented churn in the CBI over corruption allegations follows two years of hostilities between director Verma and his deputy Asthana.
The plea has also sought a court-monitored Special Investigation Team (SIT) probe into the corruption allegations against the other officials of the CBI. This note was received by the CVC on October 22, a week after the CBI booked Mr. Asthana on charges of corruption. "The grave allegations of corruption by senior functionaries of CBI one against another, also widely reported in the media, have vitiated the official environment...the order is passed keeping in view the extraordinary and emergent situation which has arisen", the order said.
- The Supreme Court has stated repeatedly that the CBI ought to be insulated from the government. The presence of their men outside the directors house is likely to generate a political storm as opposition political parties are watching the developments closely and accusing the government of interference in the law enforcement agencies.
The bench, which also comprised Justices SK Kaul and KM Joseph, asked Bhushan to provide details and said it would consider granting urgent hearing on the petition.
Asthana and Kumar both challenged the FIR in the Delhi High Court, which on Tuesday ordered CBI to maintain status quo on the criminal proceedings against Asthana.