The 57-year-old was arrested in a town north of Vienna on charges of sexual abuse of his children and the grand-children under his custody. The case is being compared to another, discovered 10 years ago.
The State Office of Criminal Investigation for Lower Austria announced they had arrested the man earlier this month in the Mistelbach district on suspicion of sexual abuse of his two daughters. They were then under 14, the age of consent, police spokesman Heinz Holub said.
The man, whom police did not name, is also suspected of the sexual abuse of his two underage grand-daughters. He had custody for the two girls since the death of their mother, one of the daughters he is accused of abusing. She died in 2017.
Before her death, the man and his alleged victims had all lived together in the Mistelbach area, in eastern Austria near the Czech and Slovak borders.
Police did not say whether the suspect may be the father of his own grand-children.
The assaults on the man's daughters are believed to have taken place before 2012. The alleged abuse of his grand-children is thought to have taken place in 2018.
When the man did not appear for an interview with police this week, he was detained and taken to Korneuburg prison where he was formally arrested.
Investigators have instigated a wider investigation into the case.
The suspect denied the allegations during interrogation.
Comparisons with the case of Elisabeth Fritzl
The case has already raised comparisons with that of Elisabeth Fritzl who was imprisoned by her father in the basement of their family house in Amstetten in western Austria for 24 years. He had abused her since the age of 11. She was raped by her father 3,000 times and kept away from daylight for 8,516 days.
In January 1983, aged 16, Elisabeth tried to run away. But after three weeks, police found her and took her home to her father.
Fritzl's ordeal finally ended in 2008 when, aged 42, she went to hospital to visit her daughter, one of seven children born from the incestuous relationship with her father. Staff at the hospital became concerned and suspicious because of her appearance, and she was able to tell police what had happened to her. Her father, now 83 years old, is still in prison.
Elisabeth was given a new identity and went to live in a village in Austria with her children. She was given police protection as she recovered from her ordeal.