If you see severe intoing or knee rotation, you may want to consult with the pediatrician. As long as your child can participate in developmentally-appropriate activities and is sitting comfortably… I would ignore the teacher’s advice. If your 3 year old becomes uncomfortable sitting in this position, then the preferred sitting position will probably change naturally.
I found a couple references in medical journals (that probably have nothing to do with your child… just FYI references about “W” sitting):
Lower-extremity Surgery for Children with Cerebral Palsy: physical therapy management from the Journal of Physical Therapy (1992) refers to “W” sitting as a “stable and functional posture” and, in this specific case, may be due to “compensation for increased extensor tone across the pelvis and hips, in which the legs are maintained in a flexed position by the weight of the body.”
Common Lower Extremity Problems in Children from Pediatrics in Review (2004):
Intoeing
Intoeing has three possible locations of origin: the foot, between the knee and the ankle, and between the hip and the knee.
Medial femoral torsion (MFT) (sometimes known as femoral anteversion) is a twist in the femur between the hip and the knee. It is the most common cause of intoeing in children older than 3 years of age. The orthopedic literature generally distinguishes between “femoral anteversion,” which is the normal alignment of the proximal femur vis-à-vis the distal femur, and “medial femoral torsion,” which is pathologic degrees of femoral anteversion. Babies are born with increased femoral anteversion relative to adults (40 degrees versus 10 degrees), and they are born with lateral external rotation contractures that mask that difference. The natal anteversion decreases steadily by about 1.5 degrees per year. In contrast, most children who have clinically evident MFT have version angles increased to about 60 degrees between the ages of 4 and 6 years.
Children who have MFT typically sit in what is known as the “W” position (Fig. 3). The ability to sit comfortably in a “W” position is associated with both MFT and ligamentous laxity, an autosomal dominant variant of normal that is not inherently pathologic, but contributes to several musculoskeletal disorders in children and adults. Animal and experimental models have shown that increased loading of the femur in torsion (as occurs while sitting in the W position) can cause increased femoral version. This is the reason that some orthopedists now consider MFT to be an acquired rotational deformity and not simply a manifestation or persistence of an inherited extreme of natal femoral anteversion.
Generally, MFT resolves without intervention. Some orthopedists recommend that the parents discourage sitting in the “W” position, although the importance of doing so is controversial. The deformity continues to correct very slowly, until the age of 8 to 10 years.
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The fact of the matter is that your child is comfortable with their manner of sitting. I would likely mention to the pediatrician (the next time we were in the office, not meeting specifically for this purpose) that the teacher is concerned about potential long-term consequences about “W” sitting… and leave it at that. Your pediatrician will know best.