Two girls, aged 7 and 4, were on Percy Street in Rozelle at around 10.30am yesterday when the unknown man drove up to them and offered them lollies.
After a short time, one of their family members came out onto the street and the man drove off towards Denison Street.
Police have released CCTV footage of a vehicle, hoping to speak to the driver who may assist their inquiries.
The driver is described as being a man of Caucasian appearance, aged in his 60s or 70s with an unshaven beard.
He was last seen wearing a white long-sleeved shirt and driving a dark grey Toyota Camry sedan.
Police are urging anyone with information on the man to contact Leichhardt Police or Crime Stoppers on 1800 333 000.
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