Correction Appended

ISLAMABAD, Pakistan, Tuesday, Nov. 5— Pakistan's President dismissed Prime Minister Benazir Bhutto as Pakistan's head of government early today, justifying the action with a proclamation that depicted her administration as incompetent, corrupt and defiant of constitutional restraints on executive power.

Ms. Bhutto's husband, Asif Ali Zardari, who has been widely accused of enriching himself from kickbacks on Government contracts, was reported to have been arrested while trying to flee the country.

After months of warnings, President Farooq Leghari, apparently fearing violent resistance by Ms. Bhutto's supporters, dismissed the Government in a midnight swoop. As the proclamation was being read over the state radio, troops surrounded many key installations here in Islamabad, the capital, including Ms. Bhutto's official residence, the Prime Minister's office and the state television headquarters. But at dawn, the only shooting appeared to be by opponents of Ms. Bhutto firing into the air in celebration.

''I am satisfied that a situation has arisen in which the government of the federation cannot be carried on in accordance with the provisions of the Constitution, and an appeal to the electorate is considered necessary,'' Mr. Leghari said in his proclamation.

He called for new elections in February 1997, but that deadline appeared doubtful in light of the prosecutions that are expected to follow the wide-ranging allegations against Ms. Bhutto, her husband and other members of her Government.

Mr. Leghari, a political ally of Ms. Bhutto who turned against her, acted after issuing several pointed warnings in recent weeks that he would use his presidential power to dismiss the Government if it did not take actions to curb corruption, end interference with the judiciary and take firm control of the country's plumetting economy. The economy has been weighed down by uncontrolled Government spending and a mounting national debt of nearly $30 billion that has been absorbing more than 60 percent of government revenues in taxes.

In what turned out to be last-minute attempt to save her Government, Ms. Bhutto stepped down as Finance Minister last week and dismissed virtually her entire economic management team, but continued to blame previous Governments for the country's economic problems.

In his proclamation, Mr. Leghari dissolved the National Assembly and appointed a 10-member caretaker administration of experts, headed by a little-known figure, Malik Meraj Khalid. Mr. Khalid is a former Speaker of Parliament whose most recent post has been as rector of Islamic University in Islamabad.

Mr. Leghari was expected to follow by dismissing the governments in all four provinces of Pakistan and replacing them with caretaker administrations, probably headed by the provincial chief justices.

In effect, this would mean that democracy, swept aside repeatedly by military takeovers in Pakistan's 49-year history, has been suspended again, although this time it has been replaced by civilian administrators, not generals.

The dismissal of Ms. Bhutto and her Government marked another dramatic turn in the fortunes of the Bhutto family, whose activities, in and out of government, have shaped the course of Pakistan's history for nearly 30 years. For Ms. Bhutto, a 43-year-old graduate of Harvard and Oxford, the dismissal as Prime Minister was her second in six years.

On the first occasion, in 1990, she lasted only 20 months after winning an election before similar allegations led to her ouster. This time, after winning another election in 1993, her Government lasted slightly more than three years of the normal five-year term.

Ms. Bhutto's father, Zulfikar Ali Bhutto, was dismissed as Prime Minister in 1975, citing a pattern of actions similar to the ones listed in the proclamation that deposed his daughter today.

He was hanged in 1977 by a military Government, which accused him of having been involved in a political killing, an accusation that was widely doubted by the public.

Ms. Bhutto, who spent years in jail and exile after her father's execution, returned to power on a wave of public disenchantment with Gen. Mohammad Zia ul-Haq, the military dictator who overthrew her father.