In the second major security appointment in as many days, the reshuffle could unsettle Western governments keen for stability as they prepare to withdraw most international combat troops by the end of 2014.
"In order to improve the managing of our security affairs, the appointment of Mr Daudzai as caretaker Minister of Interior has been approved by a presidential decree," said a statement from the Afghan Cabinet Secretariat.
Mr Daudzai's appointment will be viewed through the prism of April's presidential election, given he is interested in running, but is not allowed to hold a ministerial position if he does so.
The announcement comes a day after Mr Karzai appointed senior security official Rahmatullah Nabil as the acting head of the Afghan intelligence agency, the National Directorate of Security (NDS).
The previous NDS head, Assadullah Khalid, was forced to step down for health reasons after being wounded in a failed assassination attack in December.
Both Mr Daudzai and Mr Nabil will have two months in the job and will require parliamentary approval to stay on longer, according to the Afghan constitution. Mr Daudzai, who until yesterday's appointment was the Afghan ambassador to Pakistan, replaces former policeman Ghulam Mujtaba Patang. The statement made no reference to Mr Patang.
In late July parliament voted to dismiss Mr Patang, saying he had been unable to tackle a worsening security environment. Mr Karzai challenged the decision and said Mr Patang would stay as acting minister while he sought advice from Afghanistan's Supreme Court.
Mr Patang had risen in Mr Karzai's government, forging close ties with Western donors as a liaison with Nato reconstruction teams.