Parents were left confused and angry the word "black" was replaced by "little" in the traditional nursery rhyme Baa Baa Black Sheep during an Easter concert.
Despite the primary school insisting the adaptation was part of a new teaching technique, the move was described as "political correctness gone mad".
Pupils at Park Hill School in Kingston, Southwest London, sung "Baa Baa Little Sheep", causing Conservative councillor and parent Andrea Craig to voice her confusion on Twitter.
"It was about baby sheep. It's a way of teaching phonics so children understand these words they are using."
The spokesperson added the school, which teachers three to seven-year-olds, had "always had adjustments" to the traditional nursery rhyme as the children preferred to sing different variations.
But Craig added she didn't think the school should have used that particular rhyme as it could "so easily be misconstrued as political correctness gone mad".
"They have got to be a bit smarter about it."
The phonics system, which teaches children to learn by phonetics , has attracted a barrage of criticism in recent weeks.
The union argued that the government's policy of promoting phonics will send a message to schools and parents that other aspects of reading are less important.