The city hall said the march planned by an opposition umbrella group could be held in any one of several indoor venues in the capital instead.
However, the opposition Rally for Culture and Democracy (RCD) said it would defy the order and go ahead with the march.
"We have decided to march peacefully through Algiers regardless of the decision of the authorities," spokesman Tahar Besbes told AFP by telephone.
"If they want to stop this march, they will have to assume their responsibilities."
The authorities had already banned an RDC rally on January 22 in Algiers.
Algeria's RCD is part of the National Coordination for Change and Democracy (CNCD), which is composed of opposition parties and civil society groups, which had called on its supporters to rally Saturday for the lifting of a 19-year-old state of emergency and a "change of system".
The CNDC said on Saturday it intended to press ahead with the rally despite a series of liberalisation measures announced by Bouteflika a month after food riots had killed five people at the beginning of January.
The opposition is demanding the immediate end of Bouteflika's rule, citing the same problems of high unemployment, housing problems and soaring costs that have inspired uprisings in neighbouring Tunisia and Egypt.