One mother said her son, also six, was asked to perform a sex act, and that the alleged perpetrator also exposed his genitals to students.
Following an investigation, the department has admitted that the student exposed students to sexual conversations and proposed activities, but denied the existence of a "sex club". The alleged perpetrator received counselling.
The mother has been unable to make a police report because the law states sexual assault by a child under 10 cannot be prosecuted.
"Victims of a perpetrator who is under the age of 10 should still have the same rights as any other victim of a sexual crime," she said.
The case puts the Brumby Government under pressure to address the problem, barely two months after releasing new procedures guiding parents, teachers and schools on how to respond to allegations of student sexual assault.
The woman is critical of the department's investigation of sexual assault and bullying in schools and has united with parents from four other state schools to form SWAG, the Student Welfare Action Group.
The group will lobby to have the department's Student Critical Incident Advisory Unit removed from the department and established as an independent body, such as the ombudsman's office.
Parents Victoria executive officer Gail McHardy said the case raised concerns about the ability of the current legislation to protect young children. "There's a whole lot of questions around the children who are under 10. If the police can't take a statement, then how can they report their incident and then who takes carriage of it?"
Shadow education minister Martin Dixon, who will meet SWAG next month, said that, while he did not think the critical incident unit should be removed from the department, any investigation should be fair and open.
"The culture (in the department) seems to be one of hiding the problem instead of fixing the problem," he said. There was a "gaping hole" in the regulations, which needed to be re-written.
But consulting psychologist John Cheetham said six-year-olds did not have a developed sense of right and wrong. "They are too young to put themselves into someone else's shoes," he said. "We've got to be very careful about putting an adult take on it, it's all about context."
A department spokeswoman said the school acted appropriately, and "counselling had been offered to the students".