Two off-duty police officers have arrested a man after an alleged bag-snatch in Newcastle overnight.

About 6.15pm (Thursday 9 October 2014), a 63-year-old woman, and her partner, was sitting at a fast food restaurant in King Street when a man allegedly grabbed her handbag and ran from the store.

An off-duty police officer chased the alleged thief to nearby sporting grounds and was joined by another off-duty officer.

The man ran south into Smith Street and entered a storm water drain.

The two male officers followed and told the man they are police officers and that he was under arrest. He allegedly told the officers he had a knife, and threatened them, before dropping the handbag and jumping a fence into a school.

Uniformed police arrived and established a perimeter around the grounds of the school.

They gained entry to the school and a police dog located the man. He was arrested and taken to Newcastle Police Station.

The 30-year-old was charged with steal from person, trespass, resist arrest and escape lawful custody.

He was refused bail to appear in Newcastle Local Court today (Friday 10 October 2014).