Officials have denied claims a spelling error led to a 10-year-old Muslim boy, who wrote he lived in a "terrorist house", being spoken to by police.
The family of the pupil, who attends a Lancashire primary school, claim he meant he lived in a "terraced house".
The boy was spoken to by Lancashire Police at his home the next day.
In a statement, police and the county council said it was "untrue to suggest that this situation was brought about by a simple spelling mistake".
"The school and the police have acted responsibly and proportionately in looking into a number of potential concerns using a low-key, local approach," it said.
"No concerns were identified and no further action was required by any agency."
Teachers have been legally obliged to report any suspected extremist behaviour to police since July.
The boy's family said they were left shocked by the 7 December incident and want both the school and police to apologise.
'He's now scared'
In order to protect the boy's identity, the BBC is not naming his cousin, who said she initially thought it was all a "joke".
"You can imagine it happening to a 30-year-old man, but not to a young child," she said. "If the teacher had any concerns it should have been about his spelling.
"They shouldn't be putting a child through this. He's now scared of writing, using his imagination.
"From what he says he wrote it because he was trying to write 'terraced house' and he misspelt it."
Police and crime commissioner Clive Grunshaw criticised the BBC reporting of the issue and said it had not been treated as a terror incident.
Mr Grunshaw said that other worrying issues were raised in the boy's school work - not just the "terrorist" house line - and these were "reported through the appropriate channels".
"In the event there was no further action needed, but if the school and police had not acted then they would have been failing in their duty to respond to concerns."
The 2015 Counter Terrorism and Security Act places a statutory duty on schools and colleges to prevent people from being drawn into terrorism.
Miqdaad Versi, assistant secretary-general of the Muslim Council of Britain, the UK's largest umbrella group for Islamic associations, said he was aware of dozens of cases similar to that of the schoolboy.
"There are huge concerns that individuals going about their daily life are being seen through the lens of security and are being seen as potential terrorists rather than students," he said.
"This is a natural consequence of the extension of the 'Prevent Duty' to schools."
The Home Office does not publish data for the number of referrals made to Channel, the de-radicalisation programme.
However, in the year to the end of October, 1,355 people aged under 18 were referred to it, compared with 466 in the previous 12 months.
Police said the issue was reported to them but dealt with by a joint visit by a PC and social services.
"There were not thought to be any areas for concern and no further action was required by any agency."
The school said it was unable to comment because it was investigating a complaint made about the incident.