I decided to extend the existing list box and create a new listbox called SmartListBox. This implements two methods MoveUp and MoveDown that moves the selected items up or down corresponding on the method invoked, in addition to all the methods inherited from ListBox. The code is:

public class SmartListBox : ListBox
{
//Moves the selected items up one level
public MoveUp()
{

for(int i = 0; i < Items.Count; i++)
{
if (Items[i].Selected)//identify the selected item
{
//swap with the top item(move up)
if (i > 0 && !Items[i - 1].Selected)
{
ListItem bottom = Items[i];
Items.Remove(bottom);
Items.Insert(i - 1, bottom);
Items[i - 1].Selected = true;
}
}
}
}
//Moves the selected items one level down
public MoveDown()
{
int startindex = Items.Count -1;
for (int i = startindex; i > -1; i--)
{
if (Items[i].Selected)//identify the selected item
{
//swap with the lower item(move down)
if (i < startindex && !Items[i + 1].Selected)
{
ListItem bottom = Items[i];
Items.Remove(bottom);
Items.Insert(i + 1, bottom);
Items[i + 1].Selected = true;
}

}
}
}
}
This is the server side implementation and the event handler of the Up\Down button will invoke the MoveUp or MoveDown method on the listbox. The same logic can be written in javascript to provide client side implementation.