Damien Peters, a double murderer who dismembered his victims, has been arrested in Petersham after triggering a major manhunt when he skipped parole.

Police in plain clothes spotted the 50-year-old walking along Church Street just before 5pm on Monday.

Double murderer Damien Peters (centre) has been arrested "without incident" in Petersham. Credit:NSW Police Force

With the help of the dog unit, he was arrested "without incident" and taken to Newtown police station. Later on Monday evening, he was transferred back into Corrective Services NSW custody at Surry Hills.

It came just over 24 hours after Peters removed his electronic tracking bracelet and fled Randwick's Prince of Wales Hospital on Sunday afternoon.