"The government is thinking of taking control of the ashram and appoint an administrator in view of allegations that objectionable activities are taking place there," Law Minister S. Suresh Kumar told reporters at Dharwad, about 400 km north of Bangalore.
The ashram is situated on a 29-acre plot in Bidadi, about 35 km from Bangalore.
Nityananda, who is facing several cases including rape, is caught in a fresh row after a Kannada TV channel began telecasting, for the last three days, claims by several women that they had been sexually exploited by him.
Two press meets called by the controversial religious guru's disciples Thursday and Friday ended in fracas. Cases have been registered against some media personnel and a few disciples after they lodged complaints of assault against one another.
On Friday, activists of a Kannada group tried to barge into the ashram resulting in clashes between them and the inmates.
Police have banned assembly of five or more people near the complex till further orders.
Kannada groups took out procession in Bangalore and several places across the state, demanding immediate closure of the ashram and arrest of Nityananda.
The Congress and Janata Dal-Secular are also demanding action to end the alleged exploitation of women in the name of spiritual activities.
Nityananada had gone into hiding in Solan (Himachal Pradesh) for about a month in March-April 2010 after a Tamil TV channel aired a video showing him allegedly committing sexual acts. After being picked by Karnataka Police from Solan, he was in jail in Bangalore for seven weeks and has been out on bail since June 2010.