Schools can avoid excluding very young children through techniques to manage behaviour that includes running off, biting and swearing, inspectors say.
It is rare for schools to exclude those aged seven or under and those that do are usually in very deprived areas.
Ofsted compared schools in England that had done so with others that had not.
It found good relationships with parents, opportunities for children to talk together and the use of nurture groups all helped prevent exclusions.
The latest figures, for 2006-07, show there were 13,460 fixed term exclusions [suspensions] and about 260 permanent exclusions - with boys 10 times as likely as girls to be excluded.
Inspectors visited 30 schools which had excluded several young children on more than one occasion.
They also went to neighbouring schools which had not used exclusion during the same period and 12 which had excluded only one young child but on several occasions.
In the report, The Exclusion From School of Children Aged Four To Seven, Ofsted said most children "responded well to the school's expectations", but a few found this difficult.
Ofsted chief inspector Christine Gilbert said: "Exclusion of children aged under seven is still very rare.
"Ofsted inspectors found that almost all children in the schools they visited knew how to behave properly.
"Only a small number of children found this difficult but, with proper guidance and support, the need to exclude them can be avoided."