Pagination does not work

I have the following function for generating pagination links:

function theme_pagination() {
	global $wp_query, $wp_rewrite;
	$wp_query -> query_vars['paged'] > 1 ? $current = $wp_query -> query_vars['paged'] : $current = 1;

	$pagination = array(
		'base' => @add_query_arg( 'page', '%#%' ),
		'format' => '',
		'total' => $wp_query -> max_num_pages,
		'current' => $current,
		'show_all' => false,
		'type' => 'list',
	);

	if ( $wp_rewrite -> using_permalinks() )
		$pagination['base'] = user_trailingslashit( trailingslashit( remove_query_arg( 's', get_pagenum_link( 1 ) ) ) . 'page/%#%/', 'paged' );

	if ( !empty( $wp_query -> query_vars['s'] ) )
		$pagination['add_args'] = array( 's' => get_query_var( 's' ) );

	echo '<div class="pagination clearfix">';
	echo paginate_links( $pagination );
	echo '</div>' . "\n";
}

It used to work as expected, however it has just stopped. What happens after clicking on a link is that the homepage (page 1) is reloaded and url is just of homepage.

I cannot relate this bug to any update or install.

Any help or guidance is much appreciated.