In a series of tweets, Chidambaram said: "Before the day is over we will know if there will be a major crisis in J&K. Keeping my fingers crossed.
"The house arrest of J&K leaders is a signal that the government will defy all democratic norms and principles to achieve its objects. I condemn the house arrests."
Slamming the Modi government, Chidambaram said: "I had warned of a misadventure in Jammu and Kashmir. It seems the government is determined to embark upon one."
His remarks came hours after many senior political leaders including former Jammu and Kashmir Chief Ministers Mehbooba Mufti and Omar Abdullah, were not allowed to move out of their houses as strict restrictions were imposed in the Kashmir Valley from Monday morning.
Senior Congress leader and former Union Ministers Shashi Tharoor and Jyotiraditya Scindia also condemned the government over its decision to put the political leaders under house arrest.
Tharoor tweeted: "You are not alone Omar Abdullah. Every Indian democrat will stand with the decent mainstream leaders in Kashmir as you face up to whatever the government has in store for our country. Parliament is still in session and our voices will not be stilled.
"What is going on in J&K? Why would leaders be arrested overnight while having done no wrong? If Kashmiris are our citizens and their leaders our partners, surely the mainstream ones must be kept on board while we act against terrorists and separatists? If we alienate them, who's left?"
Scindia also took to twitter and wrote: "The uncertainty and fear only serves to worsen the situation. Government must be open, transparent, and take people and opposition leaders into confidence.
"Leaders being placed under house arrest overnight while mass hysteria and deployment of troops, both continue to rise. The situation in Kashmir is indeed worrying. The govt must make its intentions clear."
( With inputs from IANS )