Children aged four have been asked to choose the gender "they most identify with" on a council form.
Brighton and Hove City Council wrote to thousands of parents to confirm their primary school places this week.
The council asked parents to support their child's choice on whether they identified as male or female and allowed them to leave the form blank if their child had "another gender identity", according to The Sun.
The move has been criticised but the council defended its actions as a response to the requests of families.
The letter said: "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 with your child's school."
Tory MP Andrew Bridgen called the move "utterly ridiculous" and said: "Schools should be teaching kids to read and write, not prompting them to consider gender swaps."
Cllr Emma Daniel, head of Brighton's equalities committee, said she was aware of "concerns" over the wording.
She told The Sun: "We have inserted the additional text about gender identity in response to calls from families, young people and schools to show an inclusive approach.
"There are increasing numbers of children and young people nationally identifying as trans."
She added: "We will review this to see whether we can make it clearer that we consider discussions around gender identity to be an option for parents rather than an obligation."