Singapore on Wednesday accepted an apology from Indonesia's military chief for naming a warship after two marines behind a deadly 1960s bombing in the city-state, signaling a potential mending of frayed bilateral ties.

Gen. Moeldoko's conciliatory commentsâ€"made in an interview aired Tuesday by a Singaporean broadcasterâ€"came amid a monthslong spat that had prompted Singapore to suspend inter-military relations with its far-larger Southeast Asian neighbor.

In a brief statement, Singapore Defense Minister Ng Eng Hen welcomed the apology as "a constructive gesture" and said the city-state's armed forces would "reciprocate Gen. Moeldoko's positive intentions by resuming bilateral cooperation and activities with the [Indonesian military]."

Bilateral relations had soured in February after the Indonesian navy said it would name a frigate in honor of Indonesian marines Usman Haji Mohamed Ali and Harun Said. The two were convicted and executed in Singapore for killing three people and injuring 33 others in the March 1965 bombing of MacDonald House, a bank building in the Orchard Road shopping district.

The attack was the deadliest of 37 bombings that rattled Singapore starting in 1963, when Indonesia's then-president Sukarno led an armed confrontation in opposition to the newly-formed Federation of Malaysia, which then included Singapore. The conflict ended in 1966, a year after Singapore left Malaysia to become an independent nation.

Singaporean leaders say naming the ship Usman Harun revives painful memories of the undeclared low-level war, comprised of a series of border skirmishes and bomb attacks.

Gen. Moeldoko, in the interview with Singapore's state-owned Channel NewsAsia, said: "Once again I apologize. We have no ill intent whatsoever to stir emotions…there are sensitivities that we did not foresee and it escalated."

The general also expressed hope that bilateral defense ties would strengthen in future, but said the Indonesian navy wouldn't reverse its move to name the ship the Usman Harun, a decision that was made in December 2012.

When the naming of Usman Harun was announced, Singaporean leaders initially expressed dismay through public statements and pressed Jakarta to reconsider the move. Indonesian officials, however, said they were within their rights to honor national heroes, even as they assured Singapore that no malice was intended.

Singapore then scrapped a series of planned inter-military activities, and said it would ban the Usman Harun from its ports and naval bases. Mr. Ng on Wednesday didn't indicate if this ban has been lifted.

Most recently, the city-state withdrew its delegation from an international defense meeting held in Jakarta in March, after two Indonesian men at the event were seen dressed in uniform as Messrs. Usman and Harun.

Mr. Ng's response on Wednesday, however, paved the way for warmer defense relationsâ€"a development welcomed by Jakarta. Gen. Moeldoko "is hoping to look forward for greater cooperation," said Maj. Gen. Fuad Basya, a spokesman for the Indonesian armed forces. "We want good relationship with all countries. Zero enemies, a thousand friends."

The latest row over the marinesâ€"who carried out the bombing while disguised as civiliansâ€"had revived a spat that officials from both sides had considered settled in the early 1970s.

The two marines were hanged in Singapore in 1968, despite a clemency plea from then Indonesian president Suharto. That sparked a wave of anti-Singapore protests in Jakarta, where the two men were honored as national heroes and given ceremonial burials.

Bilateral ties remained frosty until 1973, when then prime minister Lee Kuan Yew visited the marines' gravesâ€"a conciliatory move that Singaporean leaders say closed the matter.

Relations have since improved between the two Southeast Asian neighbors and major trade partners, although disputes have flared from time to time over issues such as cross-border air pollution and Indonesia's ban on sand exports to Singapore.

â€"Andreas Ismar in Jakarta contributed to this article.

Write to Chun Han Wong at chunhan.wong@wsj.com