A leading children’s charity has said that playground taunts may lead to arrests under a proposed new law.

On Monday the Justice Secretary announced that incitement to hatred on the grounds of sexual orientation would become an offence in the new Criminal Justice and Immigration Bill before Parliament.

Kidscape, who work with bullied and vulnerable children, said that the use of the word “gay” among children is so prevalent that many did not even understand what it means.

“The word is almost at the point where it has become a general insult, the opposite of cool,” Claude Knights, training manager at Kidscape, told the Daily Telegraph.

“Children say things like, ‘Your trainers are gay.’

“It is almost in youth culture now. You get kids in primary school using it and they don’t have any idea what the word means.

“If we are going to have consequences [to the new law] we have got to have common sense in how it is applied.”

In April an 11-year-old boy was the subject of a homophobic hate crime investigation after he labelled a classmate a “gay boy” in an e-mail.

The parents of the 10-year-old victim complained to police after seeing the e-mail, which they viewed as homophobic bullying.

The boy told his parents that he used the word “gay” instead of “stupid” and did not mean to be homophobic. No action was taken against him.

Stonewall’s recent report into bulling in schools found that 92% of gay, lesbian and bisexual pupils have experienced verbal abuse, 41% physical bullying and 17% have been subject to death threats.

30% of pupils reported that adults have been responsible for incidents of homophobic bullying in their schools.

The new incitement law is supported by the Liberal Democrats, but the Conservative party has been more cautious, citing concerns about free speech.

Last month the Department for Children, Families and Schools published new guidance for teachers on homophobic bullying, which provides school governors, heads, teachers and other staff with practical information about how to prevent and respond to homophobic bullying.