A registration form, sent by Brighton council, allows parents to select gender identity as male or female.
If the child does not wish to be referred to as either, the form invites their families to leave the space blank and discuss it with their school.
The council said the note was not aimed at all pupils, but some have branded the measure "confusing" for children.
Councillor Emma Daniel, head of the council's equalities committee, said the Labour-run authority had received a complaint from one parent, who had taken the "guidance note" as an instruction.
Most parents would happily fill the form in, she said, but it gave an opportunity to a minority with children experiencing issues to leave it blank.
Ms Daniel said: "You put down male or female for your children when you apply for a school and there's just a guidance note about what to do if that for your child is an issue."
Campaign for Real Education chairman Chris McGovern said it could cause trauma and confusion for younger pupils.
"We recognise that not all children and young people identify with the gender they were assigned at birth or may identify as a gender other than male or female, however the current systems (set nationally) only record gender as male or female.
"Please support your child to choose the gender they most identify with or if they have another gender identity please leave this blank and discuss this with your child's school."
Mr McGovern said: "Children change their gender on a daily basis. They don't know who they are from one day to the next at four."
"When they're in secondary school, things change, but this is really quite cruel."
Joanne, from Brighton, who had gender reassignment surgery in her 50s, said: "Asking four-year-olds, from my point of view, I think it's too young. They're not emotionally settled."
Ms Daniels said the complaint may have been prompted by "ambiguous" wording on the form, but it was not aimed at all children.
"I think the only part of the wording that may be ambiguous is this thing about you should talk to your child," she said.
"We need to just double check our wording to make sure other parents wouldn't feel the same way."
She said the council also wanted to fulfil its equalities duty and legal obligations.
Parents of school pupils as young as four are being given the option to specify their child's preferred gender.