Airline security staff apparently failed to check the latest version of the no-fly list - which included his name - when he checked in.
After last-minute checks by customs agents, the flight was stopped as it taxied to the runway, and he was pulled off the plane.
Before now, airlines had been required to check for updates to the no-fly list each day.
Under the tighter restrictions, they will now have to check the updated list within two hours of being informed of changes, homeland security officials were quoted as telling the Associated Press.
They risk a fine for failing to comply.
The New York Times reports that in 2004 detectives interviewed a man who bought a house from Mr Shahzad, wanting more information about the Pakistani American.
This suggests that for some reason, six years ago Shahzad had attracted the attention of the US government's joint terrorism task force, although it remains unclear why.
M Ilyas Khan BBC News Mohib Banda, Pakistan
There is a sense of shock in the village of Mohib Banda near Peshawar, where Faisal Shahzad's family comes from.
Faisal Shahzad's father is a big success story for the villagers because he was a fighter pilot who rose to the position of air vice marshal in the Pakistan air force.
In general, most people don't believe that his son did what he is accused of doing in New York. They say the family is too educated and well-bred.
Very few people actually know Faisal Shahzad - some haven't seen him for years, many have never met him. Those few villagers I met who did know Faisal Shahzad said they had seen changes in his personality in the past three years following his marriage. They say he grew a beard and became more withdrawn and quiet.
While his roots may give the country of his birth a bad name, Pakistan's Interior Minister Rehman Malik said the fact the incident took place in the US and that Mr Shahzad was a naturalised US citizen made him the responsibility of the US.
"The guy goes there for a studentship. He gets naturalised. He gets married, living with his wife. So it has happened in the US. So of course primarily it is the duty of that particular authority to keep an eye [on him]."
He said that even if Mr Shahzad had received terrorism training in Pakistan, that did not change Islamabad's efforts to tackle the problem of Pakistan-based militants.
"If the individual decides to take the training individually and then gets motivated or does an act on his own, you cannot level that as a collective thing from Pakistan, or say that any sort of help is being given to them," he said.
Mr Shahzad is alleged to have bought a car that was found loaded with a bomb made from fertiliser, fireworks, petrol and propane gas tanks.
The 1993 Nissan Pathfinder was left with its engine running and hazard lights flashing in Times Square on Saturday evening - when the square was packed with tourists and theatregoers.
The bomb was discovered and dismantled after a street-vendor noticed smoke coming from the vehicle and alerted police.
The unexploded bomb left crucial evidence intact that detectives used to trace Mr Shahzad.
How Times Square bomb plotter was arrested
The trail which led to the arrest of Times Square bomb suspect began
with the discovery of a suspicious car early on Saturday evening, 1 May, close to New York's busy Times Square.
The Nissan Pathfinder was caught on cctv cameras arriving in Times
Square just before 1830 EDT. A street seller raised the alarm when he noticed the car parked with its engine running and hazard lights flashing.
Police evacuated Times Square. In the car's boot they found all the ingredients for a homemade bomb including propane gas cylinders, fireworks and two clocks, a metal gun locker containing fertiliser.
From the car's vehicle identification number, police traced the woman in Connecticut who sold the car to Faisal Shahzad (pictured). She also gave police a mobile phone number and helped identify him from photographs.
Faisal Shahzad lived in this Bridgeport building. Mobile phone records showed he made several calls to Pakistan and to a fireworks store in Pennsylvania. Court documents said he had received bomb-making training in Pakistan.
Police arrested Shahzad at 2345 EDT on Monday 3 May after he boarded a flight en route to Islamabad, Pakistan. Although his name was on a no-fly list, he had been allowed onto the plane.
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