Experts warn that unless urgent government action is taken on work-life balance and job quality a generation of children may grow up with physical and mental problems caused by "inherited stress" from their parents.
Dr Lyndall Strazdins from the Australian National University studied more than 2000 mothers of children aged four and five who are part of the Longitudinal Study of Australian Children.
"We should no longer be having a debate about whether mothers should go out to work or not, but about the quality of the jobs that are out there for them," said Dr Strazdins, whose findings will be presented tomorrow at the Growing Up In Australia conference in Melbourne.
"I think the Government really needs to address this because companies can't do it by themselves."
The Growing Up conference is based around the first results from the longitudinal study, which was launched in 2004 and aims to follow 10,000 youngsters and their parents until 2010.
The mothers were questioned about the quality of their jobs based on access to paid personal, family and maternity leave, as well as flexibility over start and finish times, perceived job security and feeling of control over their work.
They were also asked to rate their children's wellbeing in terms of whether they often seemed sad, anxious, worried, or suffered from hyperactivity, aggressiveness and other behavioural problems.
A quarter of children with mothers in the poorest quality jobs had such problems, compared with 12 per cent of those in the best quality posts.
Even when other factors such as wealth and long working hours were taken into account, the quality of how the mothers felt at work was still found to have an impact on a child's mental health.
The lack of job security for women, combined with a lack of statutory paid maternity leave, were key factors in the poor quality of their jobs.
The study found that only 3 per cent of casual jobs for women were of the best quality, compared to 44 per cent of permanent jobs.
The incoming Labor government has pledged a package of reforms aimed at implementing more family friendly work practices, including a new Office of Work and Family.