A woman found the pair, who are not related, at a playground about 12:15pm, but police said the childcare centre had not realised they were missing.
The man being sought is described as being in his late 40s to late 50s with pale skin and short greying hair, wearing an oversized black jacket, black trousers and a business shirt.
An email sent to families from the holiday program provider said extra staff had been employed to provide extra supervision at the centre.
“I would like to inform you and make everyone aware that two children were taken from the centre yesterday and an incident occurred which is now under police investigation,” the email said.
“Both children are safe and at home with their parents.”
Police commander Kylie Whitely said it was “every parent’s worst nightmare”.
“He lured and enticed them out of the centre,” she said. “It’s a delicate situation … a very serious incident.”
She said the parents of the children were “very distressed”.
Police did not know what the man had used to persuade the children to walk off with him.
“They’ve been enticed out of the centre so [they were] obviously offered something that is going to entice two young children,” Commander Whitely said.
A manager at the holiday care said the centre would not be commenting while the police investigation was ongoing.