Malaysian authorities impounded the Greek-flagged bulk carrier, the Pireas, and detained its crew after the collision Saturday with the Malaysian boat Polaris.
The neighbours have had testy relations since Malaysia evicted the island from the Malaysian Federation in 1965, ending a brief and stormy union of the former British colonies.
Ties have gone up and down over the years but have been shaky since Malaysia's Mahathir Mohamad -- who has long had a prickly relationship with Singapore -- returned to the premiership with a shock election victory last year.Maritime tensions began rising late last year when Singapore accused Malaysia of extending its claims in the strait that separates the neighbours into what had long been accepted as the city-state's territorial waters.
The city-state, one of the world's busiest cargo ports, said Malaysian vessels were repeatedly encroaching into its waters -- an accusation denied by Malaysia.
Both sides claimed that Saturday's collision off Tuas, in western Singapore, had happened in their own waters. The accident did not cause any injuries or lead to an oil spill.
"The collision between MV Pireas and Malaysian government vessel Polaris took place in Singapore territorial waters," a Singapore foreign ministry statement said.
"Singapore reiterates its call for Malaysia to withdraw its vessels from the area, as the persistent presence of its vessels clearly poses a threat to safety of navigation in the area," the statement said, adding Malaysia would be responsible for any "untoward situations" that arise.
In a statement released earlier, Malaysia's foreign ministry said: "Malaysia is committed to take appropriate measures to safeguard its territorial integrity, interests and safe navigation of vessels".
Singapore maritime authorities said the incident happened as the Greek vessel was headed to a port in southern Malaysia, and it was allowed to continue its journey as the accident was not serious.
According to Malaysia's foreign ministry, the boats communicated before the accident, and the Greek carrier had said it would steer clear of the Malaysian boat.
Tensions eased briefly last month when foreign ministers from both countries agreed during a meeting in Singapore to take steps to calm the maritime row, and a separate dispute over airspace.