The 83-year-old was only being taken for a check-up, a senior officer of the Rapid Action Battalion said.
Witnesses said a joint team of police and elite RAB entered the private "President's Park" residence and virtually whisked to a car, fuelling speculation that Ershad was arrested.
Party activists scuffled with security personnel who took Ershad straight to the Combined Military Hospital where he was admitted.
"We actually escorted him to the CMH as he was feeling sick," a RAB spokesman told newsmen without elaboration.
RAB media wing director Habibur Rahman said the RAB men deployed at his residence took him to the CMH as he "felt sick".
TV footages showed a grim-faced Ershad was sitting on the backseat of a car wearing a red sweater as the convoy of police and RAB vans drove off.
"It is mysterious, I was with him (Ershad) until the evening...he was in good health and also took part in his routine physical exercise," Ershad's press secretary Sunil Subho Roy told newsmen.
The former military ruler, who was ousted in a mass upsurge in 1990 after nine years of rule, made visible his strong reappearance in the centre stage of Bangladesh's volatile politics as he earlier this month announced that his Jatiya Party -- a key-partner of Awami League-led grand alliance -- will stay off from the upcoming polls citing lack of appropriate "atmosphere".
His "hospitalisation" at the secured facility came amid a desperate effort by Awami League to get the Jatiya Party, wracked with infighting and factional clashes, back to polls if required under the leadership of his wife Raushan Ershad, currently a minister in the polls time cabinet.
Hours after his arrest Ershad wrote to the election commission conveying his formal decision to stay off the polls set for January 5, 2013 and requesting the commission not to grant the party's "plough" symbol to anyone.
Image: H M Ershad
Photograph: Reuters