Children should be able to try out "the many cloaks of identity" without being labelled or bullied, the Church of England has said.
In new advice issued to its schools, the Church said youngsters should be free to "explore the possibilities of who they might be".
Nursery and primary school in particular is a time of "creative exploration", it says, and youngsters should be able to choose to dress up as a princess or a fireman "without expectation or comment".
Guidance for Church of England schools on homophobic bullying was first published three years ago, and has now been updated to cover transphobic and biphobic bullying.
No child should be bullied because of their perceived or actual sexual orientation or gender identity, it warns.
"The aim of this guidance is to prevent pupils in Church of England schools and academies from having their self-worth diminished or their ability to achieve impeded by being bullied because of their perceived or actual sexual orientation or gender identity."
Homophobic, biphobic and transphobic bullying causes "profound damage", makes children feel unsafe and puts their education at risk, and schools must take action to tackle it, the guidance says.
It states that schools which "promote dignity for all" enable pupils to "accept difference of all varieties and be supported to accept their own gender identity or sexual orientation and that of others".
'The many cloaks of identity'
The advice adds: "In the early years context and throughout primary school, play should be a hallmark of creative exploration.
"Pupils need to be able to play with the many cloaks of identity (sometimes quite literally with the dressing up box). Children should be at liberty to explore the possibilities of who they might be without judgement or derision.
"For example, a child may choose the tutu, princess's tiara and heels and/or the fireman's helmet, tool belt and superhero cloak without expectation or comment."
It says: "It may be best to avoid labels and assumptions which deem children's behaviour irregular, abnormal or problematic just because it does not conform to gender stereotypes or today's play preferences."
In a foreword to the advice, the Archbishop of Canterbury, Justin Welby, said: "All bullying, including homophobic, biphobic and transphobic bullying causes profound damage, leading to higher levels of mental health disorders,self-harm, depression and suicide.”
He adds: “Central to Christian theology is the truth that every single one of us is made in the image of God. Every one of us is loved unconditionally by God. We must avoid, at all costs, diminishing the dignity of any individual to a stereotype or a problem."
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