The source, from the interior ministry, said it was unclear if the extension was for six months or for a year. But another government source said that the extension was for a year. He said it had been imposed after negotiations broke down, probably because of restrictions on movement.
"As far as we know, the plan to lift her house arrest became abortive when the talks between the regime representative and her failed on Friday morning," the source said.
Security outside the Burmese democracy activist's home in the capital, Yangon, had been stepped up before her detention period was due to expire and armed police manned barricades to prevent any traffic from passing.
Aung San Suu Kyi had been allowed to meet a senior United Nations official a week ago, and members of her National League for Democracy (NLD) party had been hoping that Myanmar's rulers might release her.
Kofi Annan, the UN secretary-general, appealed directly to the head of the military on Friday to free her this weekend when her existing six-month detention order expired.
"I take this opportunity to appeal to General Than Shwe and the government to release her," Annan said in a statement. "I am relying on you, General Than Shwe, to do the right thing."
Nyan Win, a spokesman for Suu Kyi's party, the National League for Democracy said on Saturday: "This is a big disappointment and a major setback to national reconciliation. The extension is exactly opposite of what we expected."
Aung San Suu Kyi, 60, has spent more than 10 of the past 16 years behind bars or under house arrest. Her latest stretch of detention started "for her own safety" on May 30, 2003 after clashes between her supporters and pro-government demonstrators.
Myanmar has been under military
rule since a coup in 1962
Saturday is also the anniversary of the regime's ballot-box humiliation at the hands of the NLD in 1990, which won 392 of 485 parliamentary seats in the first multi-party elections in 30 years but was denied power by the military.
Myanmar, which used to be known as Burma until May 1989, has been under military rule since a coup in 1962.
Governments of Myanmar's neighbours in Southeast Asia, who had been hopeful for a release, were disappointed to hear of the extension.
Syed Hamid Albar, Malaysia's foreign minister, told reporters, "I am very surprised. I was hoping ... that they would not extend the house arrest. But that is their right. Of course, we are disappointed."
Thailand's foreign minister, Kantathi Suphamongkhon, said: "I was hoping the release should come today. It was a good opportunity ... We would like to see Myanmar back in the realm of the international community, so progress in national reconciliation is something of importance. So I'm disappointed."
He said Thailand would "work with Myanmar to try to bring this situation to a speedy and concrete development soon".