A nursery suggested referring a four-year-old boy to a de-radicalisation programme after he mispronounced the word "cucumber", it is alleged.
Concerns were raised after the youngster drew a picture of a man cutting the vegetable.
Staff in Luton told the child's mother they believed he was saying "cooker bomb" instead of "cucumber".
The case was sent to a police and social services panel instead of the de-radicalisation scheme Channel.
It decided not to take further action.
The boy's mother, who has not been named to protect her son's identity, concluded the confusion was due to the way her son pronounced the word.
"[The member of staff] kept saying it was this one picture of the man cutting the cucumber....which she said to me is a 'cooker bomb', and I was baffled," she told the BBC Asian Network.
She said she feared her children would be taken away from her and added: 'But I haven't done anything wrong... It was a horrible day."
Teachers and public service workers have a legal obligation to report any concerns of extremist behaviour to the authorities since July.
Just under 2,000 under-15s were referred between January 2012 and December 2015.
Teaching unions say there is confusion over the government's counter-terrorism strategy in schools.
Alex Kenny from the National Union of Teachers said: "Teachers are scared of getting it wrong.
"They think Ofsted is going to criticise them if they haven't reported these things, and you end up [with] the boy making the spelling mistake, or the boy saying something in Arabic - that then gets reported on."
The Department for Education said its counter-terrorism strategy Prevent is "entirely consistent" with schools' responsibilities and "good schools would already be safeguarding children from extremism".