Scott Stuart's picture book My Shadow is Purple was one of three titles recently prohibited by Malaysia's Ministry of Home Affairs, as it "may be harmful to morals".
The rhyming tale is about a child who does not identify as either a boy or a girl, with the story using colours as a means to discuss not conforming to gender expectations.
"It wasn't a book about murder, or assault, or any crime ... They chose to ban a book about being yourself," Stuart said.
"My Dad has a shadow that's blue as a berry, and my Mum's is as pink as a blossoming cherry," it reads.
"There's only those choices, a 2 or a 1. But mine is quite different, it's both and it's none."
In Malaysia, anyone found owning, printing, importing, publishing, distributing or selling the books can be fined or face up to three years in prison, the Ministry of Home Affairs said in a statement on Friday.
The ban was a preventative measure to avoid the spread of ideologies contrary to the culture and values of Malaysian society, it said.
The Melbourne-based author hopes the $1000 Scott Stuart Literary Prize, announced on Monday, will help writers who break gender stereotypes get their work seen by publishers.
"Kids need these kinds of books. Teachers need them, parents need them," he said.
The book was published in 2022, and a teacher in the southern state of Georgia in the US was fired the following year for reading it to her fifth-grade students.
My Shadow is Purple has also been removed from schools and public libraries and has become a target for activists from the extreme right, according to Stuart.
The other books banned in the Malaysian government's recent announcement were the poetry collection Koleksi Puisi Masturbasi by Amir Hamzah Akal Ali (Benz Ali), and Erik J Brown's young adult novel All That's Left In The World.