Family First says letting people to choose the gender on their birth certificates will make them meaningless.
The Government Administration Committee has recommended Internal Affairs Minister Peter Dunne changes the Births, Deaths and Marriages Act to allow it, Fairfax reports.
The Human Rights Commission has been advocating for the change for over a decade, calling costly court processes for transgender people discriminatory.
But Family First calls it a "disturbing" suggestion that will "simply confuse and harm children and young people".
"By choosing your own gender in your birth certificate, the certificates will become an object of unscientific gender ideology and effectively tell medical professionals that they got it wrong at time of birth," says national director of Family First New Zealand Bob McCoskrie.
"And just how many genders will be listed? Facebook have more than 70, and counting."