Daniele Bosio, 46, was arrested on April 5th following a complaint by members of a children's advocacy group who claimed they saw him acting "inappropriately" with three homeless boys at a water fun park in Manila.
Prosecutors have not given details of the alleged inappropriate behaviour.
Bosio, Italy's ambassador to Turkmenistan who had been holidaying in the Philippines, has since been detained in a tiny cell with dozens of other people at a police station about an hour's drive from the Philippine capital.
"This is a big mistake. Daniele is innocent and they should free him," the diplomat's father, Mario Bosio, 78, told AFP outside the prosecutor's office in Binan town shortly after seeing his son for the first time since the arrest.
"I believe in the justice system, but it is very clear that he was a victim of profiling. He is an adult white man with three children and they quickly made him out to be a paedophile," he said through an interpreter.
Bosio, who has yet to be charged, must now wait indefinitely for the wheels of the Philippines' infamously slow justice system to start turning.
Italy's foreign ministry has suspended the diplomat.
Justice Secretary Leila de Lima told AFP shortly after Bosio was arrested that, based on the police report, Bosio allegedly violated the country's law on anti-trafficking and abuse of children.
But prosecutors are still investigating the case, and on Wednesday suspended their work after the complainant called for the case to be shifted to Manila.
Bosio's brother Andreas said Bosio was being kept in a cell no larger than a garage with more than 80 inmates.
The family bought electric fans to help cool off the inmates, as well as sacks of rice because there was never enough food, according to Andreas.
Andreas said Daniele told him that he found the children lying on a Manila street covered in grime.
He cleaned their wounds and took them to the water park to have fun after they said they had never been to a pool.
"Why is it a crime to help children?" he asked. "His vacation turned into a nightmare."
Bosio's father described Daniele as a constant "backpack traveller" who spent holidays in poor communities doing charitable work.
Students and teachers at a Christian-run school in one of Manila's sprawling slums where Bosio was a benefactor also travelled to the prosector's office on Wednesday to offer their support.
"Daniele has been a constant inspiration to the children," said Carlos Ilustre, the school's administrator who said he had known Bosio for three years.