Formaldehyde is a genotoxic volatile organic pollutant and one of the causative agents of sick building syndrome. Despite of its hazardous carcinogenic effects, it has been still used in daily life products and household materials. Hence, determination of formaldehyde both in ambient air and drinking water sources is crucial to prevent its adverse health effects. Whole-cell biosensors have emerged as bio-sentinels for environmental monitoring to assess pollution in air, water and soil. Herein whole-cell bacterial bioreporter was developed based on a DNA damage response gene promoter and green fluorescent reporter protein, and the cells were entrapped in calcium-alginate hydrogel beads for sensitive detection of formaldehyde in air. Immobilisation enables portability, on-site detection ability and integration into mobile devices. Alginate bead-immobilised bioreporter could successfully detect formaldehyde in gas phase at concentration minimum of 8.1 ppm. This detection limit is useful for monitoring cumulative doses of bioavailable gaseous formaldehyde and taking precaution to avoid acute toxicity of formaldehyde. The developed bioreporter system is simple, low-cost, performable at room temperature and free of sample pre-treatment. The findings of this study will facilitate future research for the creation of portable and user-friendly devices for on-site and real-time environmental formaldehyde gas detection.