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The decision came at a tricky time for the generals, who have been criticised for their response to Cyclone Nargis.
Ms Suu Kyi's party won a resounding election victory in 1990, but she was denied power by the military.
The 62-year-old National League for Democracy (NLD) leader has spent more than 12 of the last 18 years in detention.
Police bundled a number of opposition activists into a truck as they marched on Tuesday from the NLD party headquarters to her lakeside villa in Rangoon.
Correspondents had expected her house arrest - which has been renewed annually - to be rolled over for another year.
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