Bill Spedding, 63, was granted bail in the NSW Supreme Court on Friday, two months after he was charged with sexually assaulting two girls, aged three and six, in the 1980s.

The whitegoods repairman was arrested by police investigating the suspected abduction of William, three, who vanished from his grandmother's house in Kendall on the state's Mid North Coast last September.

Mr Spedding was expected to be released from Cessnock maximum security prison on Friday afternoon and return to his wife Margaret at their family home.

As part of his bail application, his lawyers argued Mr Spedding's alleged victims had come into contact with his former brother-in-law and child rapist Jeffrey Hillsley.

Hillsley is serving a life sentence for murdering his friend and then raping the man's 10-year-old stepdaughter.

Not only are Mr Spedding and Hillsley linked by family but they were arrested by the same detective about a decade apart.

Homicide Detective Inspector Gary Jubelin arrested Mr Spedding on April 23, 2015, more than 10 years after he took Hillsley into custody.

Mr Spedding is charged with five counts of sexual intercourse with a person under the age of 10 years and two counts of common assault.

Homicide detectives have repeatedly questioned Mr Spedding over the suspected abduction of William and searched his Bonny Hills home and Laurieton office in late January.

Police have named Mr Spedding as "a person of interest" and said he was one of many lines of inquiry they were chasing.

In an unusual move, officers investigating the suspected abduction arrested Mr Spedding on unrelated child sex offences on April 22.

It is alleged he sexually assaulted two girls in a caravan parked at a Campbelltown property in 1987.