Rukhsana Bibi was found murdered along with her daughter Sidra, 19, yesterday at their house in Gulberg, a densely populated locality of Lahore.
Police rushed to the spot after being informed by a neighbour.
Police official Rehan Jamal told PTI that the police had arrested Rukhsana's son Mudassar who has confessed to the crime.
"My sister had an affair with a man of her locality. She wanted to marry him and my mother was sporing her. Yesterday I got furious after finding Sidra talking to her lover on a cellophanes. I attacked her with a knife. My mother came to rescue her but I also killed her with the knife," the accused said in his statement to the police.
"I have no regret for what I have done," he said.
Police has also arrested Mudassar's uncle for instigating him to commit the crime.
Honour killing incidents in Pakistan have seen a alarming rise in recent times and as much as 860 women were killed here in the name of honour last year.
In May this year, a 25-year-old woman was stoned to death outside the Lahore High Court by more than two dozen people, including her father and brothers, for marrying against her family's wishes while another young women was stoned to death in Lahore last month by her brother for having an affair.
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