The party high command ordered an immediate damage limitation exercise, as the controversy over his treatment brought Labour's annual conference to a disastrous end.
Mr Wolfgang was manhandled out of his seat on Thursday after shouting "nonsense" during Foreign Secretary Jack Straw's speech and was even briefly detained under the Terrorism Act when he tried to return to the hall.
When he was finally allowed in yesterday, he received a hero's welcome from delegates who gave him a standing ovation.
Amid grassroots anger that it had been one of the most stage-managed conferences ever, Mr Blair found his round of end-of-conference interviews were overshadowed by the furore. The Prime Minister told the BBC: "People are perfectly entitled to freedom of speech in our country and we should celebrate that fact and I'm really sorry about what happened to Walter and I've apologised to him."
John Reid, the Defence Secretary, told the end-of-conference rally: "I am sorry about yesterday. I was on the platform. We didn't want it. It shouldn't have happened. It's not the way we do things in here."
Both Ian McCartney, the party chairman, and Mr Straw have also contacted Mr Wolfgang to add their apologies.
Behind the scenes, senior Labour aides were aghast over the spectacle and have ordered a review of the stewarding arrangements.
One source said: "The stewarding is done by volunteers. In this case they completely over-reacted, perhaps because of protests in previous conferences by supporters of hunting."
One of the over-zealous bouncers was named yesterday as Wallace Hobson, a former Labour councillor from South Shields, Tyne and Wear. Party colleagues declined to comment on the affair, although one described him as "nice and gentle".
After meeting Mr McCartney, Mr Wolfgang said: "The matter is closed as far as I am concerned. What isn't closed is the issue of democracy in the party, because this has been a managed conference to an even greater extent than previous conferences."
He said the lack of debate over the Iraq war had been outrageous, adding: "I am unhappy about the way the party has controlled conference in the last few years. I think it has restricted freedom of speech."
He received the backing of Labour left-wingers. John McDonnell MP, chairman of the Labour Representation Committee, said suppression of dissent was "almost endemic" within the party. He said: "We need a thorough investigation into the whole New Labour culture of intimidation."
The director of Liberty, Shami Chakrabarti, said it was evidence of the Government's attack on civil liberties. She added: "When you look at what happened to Mr Wolfgang, you get some sense of what happens when you go too far down that road."
Mark Oaten, the Liberal Democrat home affairs spokesman, said: "This is a perfect example of why ordinary law-abiding people should be worried by Labour's cavalier attitude to civil liberties. Terrorism laws are there to stop potential terrorists, not gag peaceful protesters."
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