The accused Rakesh Mishra (40), who lives with the victims in their house in Shahbad Dairy, was arrested following a complaint by a neighbour.
He has been staying with them for the past one year and had allegedly raped the girls, aged 11 and 13, several times, police said.
The incident came to light last night when the elder sister approached a neighbour who informed police.
The girls were taken to a hospital where medical examination confirmed sexual assault. They were also later produced before Child Welfare Committee.
Police is investigating whether the victim's mother, who works as a maid, knew about the sexual assaults.