MPs sought to unseat Mujtaba Patang as Afghan forces increasingly replace US-led NATO troops on the frontline of the war and as the government searches for ways to open peace talks with the insurgents.
Patang, who took office less than a year ago, lost a vote of confidence by 136 to 60 in the lower house of parliament, or Wolesi Jirga.
A former deputy interior minister and career police officer, he was dismissed a month after the Afghan government formally took over responsibility for nationwide security from foreign troops due to leave Afghanistan next year.
Other lawmakers suggested that Patang had been a victim of politicking. Unlike former warlords who dominate Afghan politics, he lacks a strong personal power base.
Karzai announced in a statement that he was appealing to the Supreme Court before deciding whether or not to accept Patang's dismissal.
"He emphasises that the... No confidence vote should be justified and according to the law," said Karzai's office.
"For clarification the president decided to refer the issue to the Supreme Court, and after the Supreme Court rules, he will decide on it," it added.
He accused unnamed members of parliament of squandering police resources on their protection, interfering with detainees and of being involved in drug smuggling.
Patang defended his record in response to a barrage of accusations from the floor, saying that his police force of 157,000 was on the frontline of the war.
The interior ministry says more than 2,700 Afghan police have been killed and injured since March 21, in what would be an astonishing rate of around 22 a day.
Afghanistan's 350,000-strong security forces have suffered a steep rise in attacks as the NATO combat mission winds down.
"In eight months I have created a system. I have made 122 policies and strategies for the interior ministry," he told parliament.
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