The Department of Health (DoH) has published advice to primary care trusts urging them not to describe children as obese or tell them to do 'exercise'.
Instead, parents should be encouraged to make sure their 'ver overweight' child does 'physical activity'.
The advice comes as primary care trusts prepare for a new system in September where parents of primary school children receive letters detailing their child's weight and whether it is higher or lower than normal.
But the DoH wants the letters to refer to children with a body-mass index of over 30 as 'very overweight' rather than 'obese' because the latter is 'a turn-off'.
Ivan Lewis, health minister, said: "It's clear from research that we've done that parents want to know their child's results and whether there is concern about their health. But they want clear information which is helpful and non-stigmatising.
"This important move isn't about pointing the finger and telling parents that their children are overweight. Instead it's about equipping parents with the information they need to help their children live healthier lives."
The Liberal Democrats accused the government of "pussy footing".
Sandra Gidley, Lib Dem health spokesperson, said: "The government is clearly pussy-footing around this issue. Unless these letters are accompanied by practical help, then they will be a waste of time and resources."
Andrew Lansley, shadow health secretary, said: "If we are to avoid stigmatising children after being weighed then there needs to be sympathetic follow-up care but Labour have failed to address the chronic shortage of school nurses."