
Mas Selamat Kastari, 47, fled Wednesday afternoon from the Internal Security Department's Whitley Road centre despite armed guards, high fences topped with barbed wire and closed-circuit television cameras along the perimetre.
"This should never have happened," Home Affairs Minister Wong Kan Seng told parliament. "I'm sorry that it has."
Mas Selamat escaped after being given permission to go to the bathroom while waiting in another room before visiting his family, Wong said.
"Security has been stepped up," Wong said. Mas Selamat was not believed to be armed.
The ministry waited four hours before informing the public because the search was the priority and there was "no indication of danger to the public," said Wong.
Mas Selamat was accused of being the leader of the Singapore branch of Jemaah Islamiyah (JI), the top South-East Asian Islamic terrorism network with links to Osama bin Laden's al-Qaeda organisation.
Mas Selamat "walks with a limp" a ministry statement said. "Extensive police resources have been deployed to track him down."
Gurkha and Special Operations Command officers fanned out several kilometres from the centre and formed a perimetre around the area.
Officers with flashlights went from house-to-house and stopped vehicles at roadblocks.
The alert also went out to all border checkpoints, the police coast guard and taxi companies.
The Indonesian-born Mas Selamat was accused by the ministry of having been involved in plans seven years ago to attack the US Embassy, the American Club and Singapore government buildings in retaliation for Singapore's arrest and detention of fellow JI members.
Singapore has been a staunch US ally and supports the presence of the US-led coalition in Iraq.
Mas Selamat left the city-state in December 2001 following the arrests of nearly 40 other suspected JI members.
He was arrested twice in Indonesia before being handed over to Singapore in February 2006 and has been held under the Internal Security Act, which allows indefinite detention without trial.
JI has been blamed for a spate of terrorist attacks in South-East Asia that have killed more than 250 people since 2002. The worst attack was on the Indonesian island of Bali where more than 200 were killed.//dpa