Anjali Waghmare, Kasab's state-appointed lawyer, had been given the highest level of police protection against attacks by Indians angry at her for accepting the case.
Supriya Sobti, a journalist covering the trial, told Al Jazeera: "She was representing Kasab in this trial as well as a victim's family.
"This issue [of conflict of interest] was flagged up before ... by another advocate who is interested in representing Kasab in this trial, but was not taken very seriously."
ML Tahiliyani, the trial judge, said Waghmare had failed to disclose that she had also represented a witness injured in the Mumbai attacks in a compensation claim case.
He said he would appoint a new lawyer for Kasab.
"I don't want to appoint a junior or raw lawyer for him," Tahiliyani said.
Sobti said Waghmare's dismissal "will slow down the process tremendously ... . Normally [the appointment of a new laywer] is carried out by the state and would take a long time, but we have been told that this could happen today or tomorrow".
Kasab, 21, is said to belong to the banned Pakistan-based group, Lashkar-e-Taiba.
He could face the death penalty if convicted of charges including waging war on India, murder, attempted murder and kidnapping.
Kasab, the nine dead attackers and 35 other suspected Lashkar members wanted over the attacks, are charged with carrying out a "heinous criminal conspiracy" against the city and people of Mumbai and India.
"This was with the express intention to destabilise India, wage war against the country, terrorise its citizens, create financial loss and issue a warning to other countries," the charge sheet says.
|Many of the random killings took place at a busy railway station in Mumbai [AFP]
Two Indian nationals, Fahim Ansari, 35, and Sabauddin Ahmed, 24, are also on trial on charges of providing the group with logistical support before the attacks.
In his first public appearance on Wednesday, Kasab stood barefoot in the courtroom, dressed in a grey T-shirt and blue Adidas pants, his hair dishevelled and his beard scruffy.
He chatted and laughed with Ansari and Ahmed.
Kasab's only spoke to say "I don't know" and "I don't remember" when Tahiliyani asked him if he knew his lawyers.
All pre-trial hearings have been held either behind closed doors or via video link.
The courtroom was last used to try suspects over the deadly 1993 bomb blasts in Mumbai. It has been reinforced and a bomb-proof tunnel has reportedly been built from Iman's cell after he received death threats.
Traffic has been banned from around the Arthur Road jail for the duration of the trial, which was originally estimated to last up to six months with testimonies from as many as 2,000 witnesses.
Prosecutors say they have evidence that "undoubtedly and conclusively" links the attacks to Pakistan, including mobile and satellite phone communication between the armed men and their [Lashkar] "handlers".
Kasab's DNA and fingerprints were found on items retrieved from the hijacked Indian fishing trawler the men used to get to the Mumbai coast, it is alleged.
There is CCTV and other footage allegedly of him at Mumbai's main railway station, where more than 50 people were killed when two attackers opened fire with AK-47 assault rifles and threw grenades.
Thirty witnesses also picked him out in identification parades, the charge sheet said.