* TSA to require airlines to check watchlists frequently
* Report finds people on watchlists buying firearms (Adds GAO report on background checks and watchlists)
WASHINGTON, May 5 (Reuters) - The Obama administration on Wednesday ordered tighter airline screening to stop passengers on the "no-fly" list from boarding, a move that came after the suspected Times Square bomber nearly left the country on a Dubai-bound flight.
Airlines will have to re-check passenger manifests against the list -- banning people from flying inside the United States as well as to and from the country -- within two hours of notification of a special circumstance about a person, an administration official said.
Prior to the change they were required to do the check within 24 hours, a loophole that may have enabled Faisal Shahzad, the Pakistani-American accused in the failed New York car bombing, to board an Emirates flight late on Monday.
Shahzad had bought a ticket on Monday and boarded the flight at New York's John F. Kennedy International Airport despite having been added to the no-fly list earlier in the day. The cabin door was closed as authorities were in pursuit.
"As we saw with Faisal Shahzad, in an expedited no-fly nomination, the airline is responsible for manually checking the name against the no-fly list within 24 hours," the official said, declining further identification.
"In his case, the airline seemingly didn't check the name, and the suspect was allowed to purchase a ticket and obtain a boarding pass," the official said.
U.S. Customs and Border Protection officials discovered he had boarded the flight but before it left the gate, they had the door re-opened and Shahzad was taken into custody, a U.S. official has previously said.
Shahzad, 30, was arrested and charged with driving the car bomb into Times Square late on Saturday and trying to detonate it. He has admitted to his role in the plot and receiving bomb-making training in Pakistan, according to court papers.
When U.S. authorities searched the car he drove to the airport, they found a handgun that he had purchased in March. However, Shahzad was not on any of the terrorism watchlists at that time.
A report released on Monday by the investigative arm of Congress found that over the last six years, 91 percent of individuals who were on various U.S. watchlists and had undergone background checks to buy firearms or explosives were permitted to make such purchases.
The Government Accountability Office cited FBI data that only 9 percent of the 1,228 applications were denied, sparking debate among U.S. senators about a legislative proposal to bar individuals on the watchlists from buying firearms.
Republican Senator Susan Collins said the information used to draw up the watchlist was often only partial.
"The evidence used to compile the watchlist is often fragmentary and can be of varying degrees of credibility." She said it was questionable whether the watchlist should be used to prevent Americans from owning guns.
New York City Mayor Michael Bloomberg, a strong gun control advocate, and Independent Senator Joe Lieberman, chairman of the Senate Homeland Security Committee, noted that the law already restricted and in some cases banned gun ownership by convicted felons.
"To me this is an extraordinarily limited law that is being proposed," said Lieberman, a backer of the legislation.
(Editing by Paul Simao)