The 61-year-old drummer was arrested at his Tauranga home on Saturday night and is being held in custody.
He is set to appear in Tauranga District Court tomorrow morning.
It is understood prostitutes were present at Rudd's home at the time of his arrest.
The nature of the arrest is unclear and it is not known whether Rudd will face any fresh charges when he appears in court again.
Bay of Plenty police have refused to comment on the arrest, with a spokesperson telling the New Zealand Herald she could not discuss individual cases.
Also unclear is whether the arrest could jeopardise an appeal lodged by Rudd's lawyer, Craig Tuck, against Rudd's sentencing and conviction, or the sentence itself that Rudd received on July 9 after admitting to charges of threatening to kill an employee, and for methamphetamine and cannabis found in his home during a police raid last year.
Mr Tuck confirmed Rudd had been arrested but could not comment further, saying "it's a matter we'll resolve on Monday morning".
Security guards which usually keep watch over Rudd's Harbour Drive home weren't present when the Herald visited.
Neighbours said they did not hear anything out of the ordinary on Saturday night or notice any police vehicles, although one added foul weather would have masked any noise from next door.
One said she not seen Rudd for some days.
The last time Rudd was in court, Judge Thomas Ingram warned the rocker that he would go to prison if he breached the terms of his sentence, which confined him to his waterfront home, subjected him to 24-hour monitoring and prohibited him from taking any drugs not prescribed to him.
"I stone cold guarantee that's where you'll end up - I'm not your headmaster, I'm not your father, I'm a judge," Judge Ingram told him at the time.
Judge Ingram also remarked that home detention had been his sole alternative to sending Rudd to jail.
Auckland University law expert Dr Bill Hodge told the Herald at the time that Rudd should not have any doubt Judge Ingram was serious when he told him that any re-offending would result in jail.
"If he doesn't pay a parking ticket, he's inside ... well that's a slight exaggeration, but he certainly doesn't want a warrant out for his arrest."
- By Jamie Morton of the New Zealand Herald
