Angry British tourists have accused police of "covering up" an attempted child abduction by a gang at a popular holiday resort in Cyprus.

Holidaymakers claim a gang dressed up as waiters allegedly attempted to lure three children, all under the age of 10, into cars from the Anastasia Beach Hotel, Protaras.

A man and a women – believed to be Romanian – who were seen leading two children towards a car, were confronted by one of the holidaymakers and handed over to police.

However, a relative of a Scottish tourist who saw the incident unfold, claimed investigators are "acting like nothing happened" and officers have denied there was any evidence of a failed kidnapping.

Describing the incident, the relative, who does not wish to be named, said: "A waiter who had been in the pool area with the children walked with two young boys out the front door. An Irish guy at the bar spotted this and thought something wasn't right, so he followed them out the door. A pick-up truck pulled up and (the waiter) tried to bungle the kids in.

"The Irish guy punched the waiter to the floor, and told the kids to run back into the hotel. Members of staff came from the hotel and detained the guy. Basically, the police in the hotel are trying to cover it up and act like nothing's happened."

According to police in Cyprus, a 19-year-old man, who was suspected of filming underage children, was questioned however, officers said they had searched through his mobile phone and his home, but concluded he had only taken photographs of adults involved in a dance performance at the hotel.

Police spokesman Nikoletta Tyrimou told the Cyprus Mail: "Police officers arrested a 19-year-old man from Bulgaria who holidaymakers said had been filming their children and was trying to abduct them. We questioned the suspect, went through his phone and also searched his home. Nothing we found suggests that he is part of a child-abducting gang or that he was stalking children. He has since been released while police take statements from all those present at the scene."

A director of Tsokkos, the company which runs the Anastasia Beach Hotel, told Sky News the attempted abduction claims were "exaggerated", adding: "This is untrue. Nobody tried to take the kids away.

"According to the police investigation, the claims of child abduction are completely unjustifiable and invalid as nothing was found to suggest that the person involved intended to carry out such an act," it said in a statement. "The 19-year-old man involved is not an employee of the hotel and is not a known person to either the management or staff."

Between 50 to 60 tourists, mainly from the UK, have left the hotel early and are now staying at a five-star hotel in Paphos - a three-hour drive from the complex in Protaras. Two families have cut their holidays short and have returned to the UK.

Thomas Cook, which regularly uses the hotel for holiday packages, said they are investigating the incident.

A spokeswoman said: "Although there are conflicting reports as to what exactly occurred at the property, we would like to reassure all customers that we take all allegations incredibly seriously and we are continuing to work closely with our customers in the resort and the local authorities."

The tour operator said it continues to offer holidays to the Anastasia Beach Hotel and to Cyprus, "where customers are continuing to enjoy their holidays with us".

The Foreign and Commonwealth Office has described the incident at the complex as "concerning", and confirmed that assistance had been provided to a British family.