ATHENS -- A jailed far-left terrorist gunman serving six life sentences vanished while on New Year's leave, prompting Greece's embarrassed government to review the prison furlough system.

The escape prompted a nationwide manhunt Tuesday and forced the minister in charge of police to concede that Greece still faces a considerable threat from domestic terrorists.

Authorities said Christodoulos Xiros, 55, failed to make an obligatory daily appearance Monday at a police station in northern Greece. He was convicted in 2003, along with two of his brothers, of belonging to the November 17 group and had served 10 years of his term for involvement in a string of shootings and bombings.

Xiros' lawyer, Frangiskos Ragoussis, said he believed his client -- who claimed to be a political prisoner -- had no intention of returning to Korydallos Prison in Athens.

"From what I understand ... (Xiros made) a political decision which is fully in tune with his political activity," he told private Skai TV.

Police located a car used by Xiros in the northwestern town of Florina, some 200 kilometres from the Halkidiki area where he was last seen.

Government officials said the incident would prompt a strict review of how those convicted of terrorism and other severe crimes are granted leave from prison. Under current law, inmates serving life terms can be let out for a few days after serving at least eight years, provided prison and judicial authorities deem that they are not likely to escape or commit new crimes.

Xiros had been granted six furloughs in the past, without incident,

"The benefit of prison leave ... cannot be turned into a means to undermine the country's crime-fighting policies," Justice Minister Haralambos Athanassiou said.

November 17, which mixed Marxist ideology with nationalism, killed 23 people -- including foreign diplomats, policemen and businessmen -- between 1975 and 2000. It was broken up after a string of arrests in 2002, in a security crackdown just before the 2004 Athens Olympics.

A lull in terrorist attacks after the arrests was broken by a series of smaller anarchist groups, which carried out bombings and gunfire attacks that have left six people dead since 2009.

Public Order Minister Nikos Dendias expressed concern at Xiros' escape.

"Unfortunately, our country has a big problem with domestic terrorism," he said.