The report says: "Children start learning 'gender appropriate' and 'gender-role' behaviour by the age of two, and develop their understanding of ideas about gender-related characteristics during their toddler and preschool years".
Of more than 800 parents of 0 to 3-year-olds surveyed, 79 per cent said they wanted their children to be free of limiting gender stereotypes, and 92 per cent agreed it was important to treat girls and boys equally in their early years.
The report recommends parents being conscious of their language and attitudes when it came to gender attitudes while caring for kids of this age.
The organisation's chair Natasha Stott Despoja said: "Language matters, and expressions of gender stereotypes shape attitudes that last into adulthood. These can include telling boys that 'boys don't cry' when they express their emotions, or calling girls 'bossy' when they assert themselves.
"These notions embolden the stereotype that men make better leaders due to being more decisive and ration. This view is supported by one in five Australians."
Ms Stott Despoja said it was up to parents to exert their influence over their children's development, and work to stamp our gender discrimination in early years.
"Challenging outdated gender stereotypes can be as simple as sharing the care-giving and house work. It can include exposing our children to a diverse range of role models and championing both female and male leaders in books, television, movies, arts and sport," she said.
In a statement sent to news.com.au, Mrs Shorten said supporting children to pursue interests free from limiting gender stereotypes was "crucial".
"Gender inequality is underpinned by rigid adherence to gender stereotypes, and evidence says gender inequality and disrespect breed violence against women," she said.
The daughter of former Governor-General Dame Quentin Bryce, Mrs Shorten said their was a strong emphasis on gender equality in her family growing up.
"My childhood home was a household of ideas about gender equality, shared parenting and education. It was a household where talk became action," she said.
"For as long as I can remember, my mother has fought to eliminate domestic violence from the community. It wasn't a passing interest - it has been a lifetime commitment."
Mrs Shorten joins Rosie Batty and Lucy Turnbull as an ambassador for Our Watch.