The man, who cannot be named to protect the identity of the baby, will now be eligible for parole in December.

He was initially sentenced in Newcastle District Court by judge Penny Hock to a maximum of eight years jail, with a minimum of six years, for having sexual intercourse with a child under the age of ten.

But the NSW Court of Criminal Appeal has ruled the sentence was "manifestly excessive" and reduced it to a maximum of six years and six months, with a minimum period of four years and three months.

A jury found the man guilty in September 2016 of digitally penetrating the young girl at the house he shared with her mother, and other children, in the early hours of August 18, 2014.

The court heard that the girl's mother woke to find the man holding her daughter and she could see his right hand was inside the toddler's nappy.

The mother took the baby and noticed "redness" in her genitals when she changed her wet nappy.

Immediately she consulted a doctor and was referred to the John Hunter Hospital where tests revealed blood and abrasions in the girl's genitals.

The mother moved out of the house with her children that day.

Experienced paediatrician and sexual assault practitioner, Dr Rhonda Ticehurst, examined the toddler the next day and observed abrasions and two small areas of pinpoint bruising to the baby's hymen.

Dr Ticehurst found the injuries were the result of "genital touching".

The mother phoned the man a few weeks later, while the call was being recorded by police, and confronted him about what she saw.

"He accepted that it was possible that he had touched the child if he had been drinking, but denied touching [the baby]," the judgment reads.

"In an interview with police that followed his arrest, the man again denied the offence, although conceded that it was possible if he had been drinking.

"The evidence at trial established that he had not been drinking at the relevant time, and was sober."

Judge Hock found that the due to the baby's age she was not able to complain and the offence would have gone undetected if the mother had not woken at the time.

Despite agreeing with a psychologist report that the offence "seems to be completely out of character" for the man, judge Hock said the fact that he maintained his innocence showed no remorse.

But court of criminal appeal judge Helen Wilson found the sentence was "severe", describing the offence as "isolated" and "very brief in duration".

"This offence was very much out of character, further reflected by the absence of any conduct that could have constituted grooming...," she said.

"Significantly, there was no evidence that the offence was committed for sexual gratification, a matter which reduces the gravity of the offending..."

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