A 26-year-old Canberra man accused of taking a child during a dramatic incident on Saturday has been referred for a mental health assessment.

John Michael Gray appeared via video link in the ACT Magistrates Court today.

He sat with his head bowed as charges of unlawfully taking a child and possessing a knife were formally read to him.

Mr Gray is accused of grabbing a five-year-old child, who was not known to him, and running towards a laneway near Petrie Plaza in Civic on Saturday.

The child’s parents and members of the public pursued him.

Mr Gray is alleged to have let the child go and to have dropped a knife, before members of the public restrained him while they waited for police.

There were no new details of the incident mentioned in court today.

Instead, Magistrate James Lawton issued a referral for a mental health assessment before any future court action, after a request from Mr Gray’s lawyers.

Mr Gray will remain in custody until the assessment is complete.

No future court date has been set.