A computer engineer has been arrested and accused of hijacking San Francisco's FiberWAN computer system which holds details of city payroll files and confidential law enforcement documents.

City prosecutors have charged Terry Childs, a 43 year-old computer network administrator, with four counts of computer tampering on the network.

They allege that he has locked out all passwords except his own and is refusing to hand it over.

"Defendant Childs was arrested on 13 July at his home in Pittsburg, California by members of the San Francisco Police Department and was immediately taken into custody," said the city's DA office in a statement.

"The felony counts against the defendant were charged the following day by the San Francisco District Attorney’s Office."

City officials are now working on the system to regain access and control and to date Childs is still not helping them.

The media are reporting that Childs was facing disciplinary action for poor performance and had set up a software alert if anything changed in his personnel file. He may also have passed password information to third parties.

Childs faces a possible seven years in prison and will be back in court on Thursday.