The claims were aired at Moorabbin Magistrates Court on Friday afternoon, as Timothy Blamires, 33, was refused bail.
Police will allege a camera was found at Kingswood Primary School, at Dingley Village in Melbourne's southeast, on Tuesday, with Blamires arrested at the school later that day.
He has been charged with producing and possessing child abuse material, installing an optical surveillance device and refusing to comply with a police direction.
A cleaner was replacing an odour dispenser's fragrance inside the male toilets on Tuesday when she found a hidden camera inside the dispenser, which had a wire connected to a hard drive, court documents allege.Â
The cleaner placed it into a plastic bag and put the bag on the principal's desk, with triple zero called.
While waiting for police to arrive, the bag was left inside the desk and Blamires is accused of collecting the camera and putting it inside a drawer in sick bay before walking into his classroom to teach.
The odour dispenser was found inside his backpack at the school after his arrest and police seized devices from Blamires' home including laptops, phones and tablets.
Blamires appeared in court via video link on Friday after applying for bail on Wednesday.
His defence lawyer had argued Blamires was entitled to bail as he had no prior convictions and any risks he posed could be addressed with strict conditions, the court was told.
His brother offered a $50,000 surety to secure Blamires' release and said he would live with him and ensure he did not violate any of his bail conditions.
Those conditions could include a ban on Blamires being within 200 metres of any school and possessing a device with access to the internet.
But prosecutors argued Blamires' risk to safety of the public, children in particular, and the possibility he will destroy evidence, were too great to permit his release into the community.
Magistrate Timothy Gattuso detailed claims Blamires had tried to hide the camera after it was found by a cleaner.
"You appear to have removed the device that had been located in the toilets by the cleaner, from the principal's office, and apparently hid it," he told the court.
There were also concerns Blamires may "access the cloud and destroy evidence" as he had allegedly given police false passwords to his devices, the magistrate said.
"Some of the passwords you gave to police on their direction to access devices that were seized were not successful in enabling access," Mr Gattuso said.
He said Blamires was "highly likely" to face a term of imprisonment if the charges against him were proven, pending any matters in mitigation.
Blamires' bail was refused as Mr Gattuso found his risks could not be reduced to an acceptable level, as he pointed to difficulties in enforcing a ban on internet access.
"Conditions not to access the cloud or not to use the internet are almost impossible to enforce, given the ease in which access can be obtained," he said.
Blamires' lawyer said his client had been struggling with his mental health and was "extremely vulnerable" in custody, as he asked for him to be placed in an isolated cell.
He was taken back into custody and will return to court on May 15.
Victoria's Department of Education said it was working closely with Kingswood Primary School and police to respond to the matter "which is deeply distressing for the school community".
"Immediate support is being made available for students and staff impacted by this incident," a spokesperson said.
1800 RESPECT (1800 737 732)
National Sexual Abuse and Redress Support Service 1800 211 028
Lifeline 13 11 14
Kids Helpline 1800 55 1800 (for people aged 5 to 25)
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