Parents are furious and worried that their children have been permanently scarred after their skin reacted to the paint at the event in Hull.
One seven-year-old girl has been left with a painful butterfly design burned onto her face, while her nine-year-old cousin was left with a logo of his rugby team on his cheek.
Rhys Ablett asked to have the name of his favourite rugby league team, Hull FC, drawn on his at the event earlier this week, but was surprised to find it wouldn't properly wash off the following morning.
His mother Kerry Bradley, 33, said: "I washed it off on Monday night and his face looked fine but he woke up the next morning and his cheek was bright red.
"At first, I thought I'd rubbed it off a bit hard but then on Wednesday it was even worse... I took him to the minor injuries unit because it looked really agitated. It was bright red and raised, like someone had scratched it or branded it onto him and he said it was sore.
"He was given an antihistamine and they said to put a cold compress on if it gets worse. It's awful as a parent to see your child like this.
"He's been really embarrassed about it and he didn't want to go to football training on Wednesday night because he thought all the kids would laugh at him."
Kerry's niece, seven-year-old Millie, had a butterfly painted on her cheek at the ProudParents Fun Day at City Hall in Hull, East Yorkshire.
Her mum Donna Bradley, 32, said and has also been left with suspected chemical burns.
She said: "Throughout Tuesday it just got worse and worse. It looks like it's the black paint which has marked her face so it must be an ingredient used in that colour.
"I took her straight to the doctors on Tuesday and they said it could be chemical burns or it could be an allergic reaction.
"I don't see how it's an allergic reaction when we know at least ten other children who have experienced the same thing."
Donna said she contacted the man who painted the children's faces, who told her he has never had any problems before. He is now contacting the face paint manufacturers to see if an ingredient could have reacted with the children's skin.
Donna said: "He has been very helpful but people need to be made aware of what happened, in case it has happened to their children."
Rachel Roberts, of Hull City Council, told the Sun that 500 children had their faces painted on Monday and there had only been three complaints.
She said: "Work has begun to test the product and ingredients, working with the trader and complainants."