“They were frightened, they were crying, shaking and singing out for their mum,” she told 9News.
She said the incident lasted for more than an hour.
“We were yelling at him to tell them to release them, but he just wouldn’t give up,” she said.
Officers were called to the Cable Beach home about 2.15pm to reports of trespass but found more than that.
A man was taken in for questioning and paramedics checked the children before they were reunited with their family.
Police called for calm tonight amid fears tensions could boil over.
“Police are working closely with the affected families, and encourage community members to allow officers to thoroughly investigate the matter so that the full circumstances can be established,” a police spokesperson said.