The police had him over traffic violation, but he was let go. A day later, someone came forward accusing him of sexual assault and car theft.

Killer Trent Jennings, 26, has been held in a psychiatric facility since 2005 after he stabbed a man to death while on drugs.

He was found not guilty of murder on the grounds of mental illness, but he was ordered to go through psychiatric therapy.

Jennings was granted the day release privilege by a mental health review tribunal in November last year. When he was on day release last Thursday, he allegedly went to the Zetland home of a 50-year-old man he met online.

When Jennings was pulled over for traffic violation Friday, police did not know he was on day release and that he is a prime suspect in a car theft case.

"The bona fides of the driver were checked, he was issued with some infringement notices and let go," NSW Police Assistant Commissioner Mark Murdoch told reporters in Sydney on Tuesday.

"About an hour after that, the fellow who had been tied up the day before walked into Redfern police station to report that incident."

Jennings's online friend reported to police that his car had been stolen and Jennings tied him up.

Police pulled Jennings over at 6:00pm and the mental health authorities reported he had escaped the facility at 11pm.

NSW Premier Barry O'Farrell on Tuesday ordered a report into the circumstances, the Herald Sun reported.

"I share some of the concerns about the lack of information about his release or his escape," Mr. O'Farrell told reporters in Sydney.

The NSW Supreme Court was told in 2005 that Jennings had stabbed Giuseppe Vitale in the neck with a kitchen knife after being tied up during a sexual liaison.

The court was also told Jennings suffered a psychotic illness that was aggravated by illicit drug use.

He had taken three or four ecstasy tablets in the hour before meeting Vitale, as well as an intravenous shot of amphetamines, Herald reported.

Jennings told a police psychiatrist that he had attacked Vitale because he heard voices saying his date was going to rape him.

Police said Jennings could be driving the stolen black 2008-model Mercedes B200t with NSW registration ALM 82B.

Through the media, authorities advised the public against approaching Jennings in any way. Instead, people should call the police once he is spotted.