A south Canberra man accused of sexually molesting his three-year-old granddaughter will stand trial in the ACT Supreme Court.

The man has pleaded not guilty to two counts of incest.

Police allege the 52-year-old was babysitting when he performed two sex acts on the young child at his townhouse in January.

The girl's parents had asked the man to look after the girl while they attended a birthday party at a nearby club and dropped her off at his house.

Police say the crimes came to light the next day when the girl was playing with her mother in the living room of the family home.

She allegedly told her parents that her grandfather had done something to her and it was ''our little secret''.

Police say the girl told investigators that the acts were ''disgusting'' and ''gross'' and mimicked performing a sex act.

The man was arrested after the girl's parents contacted police.

He cannot be named because doing so would identify his granddaughter.

When the child's father confronted the man, he allegedly said he had drunk nine beers on the evening he was babysitting and found it difficult to remember what had happened.

Police allege he was also drunk when he was arrested and was not fit to be interviewed for several hours. The man spent some time in custody after his arrest.

Chief Magistrate Lorraine Walker committed the man to the Supreme Court for trial and adjourned the matter to May.

The man is subject to bail conditions that require him to report to police regularly and Ms Walker varied his bail to allow him to go to the police station earlier in the day.