Shama-il Tirmidhi Chapter 17, Hadith Number 4 (115).
Hazrat Hudhaifah bin Al-Yamaan radiyallahu anhu reports that Rasoolullah sallallahu alaihe wasallam caught the shin of my leg, or of his own leg and said, “This is where the lungi should reach, and if not, then a little further down, and if not, then the lungi has no right on the ankle.” (For this reason the lungi should not reach over the ankles.)
It is haraam to cover the ankles when wearing a lungi or an izaar etc.. The Ulama say that only those people are exempted who have a boil or a sore on the ankle, which will cause flies etc. to sit on it. Only then shall it be permissible to cover it with a lungi or izaar etc., with the object of safeguarding it till it heals.