The 43-year-old appeared in Fremantle Magistrates Court on Tuesday charged with possessing and distributing child exploitation material between January 7 and 9.
No pleas were entered and Silvey was granted bail with strict conditions, but he reportedly spent the night in custody after failing to post a $200,000 guarantee.
Promotion of Silvey's work has halted as education departments across the nation remove his novels from student reading lists.
Western Australian Education Minister Sabine Winton was the first to order schools to stop using Silvey's books as student texts.
"The nature of these allegations is deeply concerning," she said in a statement soon after the author faced court.
Two of Silvey's best known novels, Jasper Jones and Rhubarb, were on the WA school curriculum as suggested texts that could be studied by year 11 and 12 students.
"I have asked the Department of Education to ensure that schools cease using texts by Craig Silvey for the 2026 school year while the allegations are under investigation," Ms Winton said.
The NSW education department followed, saying it would also stop using Silvey's books.
"NSW public schools will cease using any texts by the author and remove his titles from their school collections while legal proceedings are underway," a spokesman said on Wednesday.
Education departments in Victoria, South Australia and Tasmania have also removed Silvey's novels from their lesson plans and reading lists.
A Perth local council that previously offered the Craig Silvey Award for Young Writers has also distanced itself from the author.
"Silvey will have no affiliation with the 2026 Young Writers Award," City of Subiaco Mayor David McMullen said.
Silvey is best known for his 2009 coming-of-age novel Jasper Jones, which is considered a modern Australian classic and was aimed at adults and young readers.
The global hit won the Australian Book Industry's Book of the Year Award and has been adapted for film and various stage productions.
His most recent novel Runt and the Diabolical Dognapping was published by Allen & Unwin in September.
Allen & Unwin said it was aware of serious charges and "deeply distressing" allegations against Silvey, and it would pause promotional activity of Silvey's work while the legal process took its course.
Other books include Rhubarb, published by Fremantle Press, and Honeybee, which won the Australian Indie Book Award in 2021.
Fremantle Press said the allegations against Silvey were shocking and abhorrent, and it would stop to promoting Rhubarb while his case is in court.
"In a tight-knit community, this news affects our authors, industry colleagues, bookstores, schools and readers," a spokesman said.
Detectives executed a search warrant at Silvey's Fremantle home on Monday.
He was allegedly caught engaging with child exploitation offenders online.
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