They said children would be allowed to leave the question blank if they had "another gender identity".
The letter read, according to PA: "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."
An MP from North West Leicestershire has branded the move "utterly ridiculous".
"Schools should be teaching kids to read and write, not prompting them to consider gender swaps," Tory MP Andrew Bridgen said, according to PA.
Councillor 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."
Councillor Daniel said they will "review the form" to see if they can make it clearer to parents that they want to consider discussions around gender identity, rather than it be an "obligation".
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