NSW principal sorry for 'village idiot' letter

A NSW primary school principal has apologised for referring to students with mental health problems as "morons" and "village idiots".

Chris Cundy, principal at Calare Public School in Orange, wrote an internal letter to his staff notifying them of an upcoming mental health workshop at the school.

Mr Cundy asked teachers to identify students who may have "two heads, webbed feet" or who were "village idiots".

"I will send out a well-scripted letter in week four starting off: Have you bred a moron? You might like to access the services of Calare's new initiative, `Operation Nutcase'. Sign on the dotted line or leave your thumbprint if you can't write," the letter said.

After the letter gained widespread media coverage on Thursday, Mr Cundy wrote to parents apologising for his "serious error of judgment".

"My attempt at humour was misguided and inappropriate," he said in the statement.

"I apologise for any hurt or grief I have caused anybody in the school and wider Calare community."

NSW Premier Mike Baird condemned the letter as "stupid".

"Those comments have no place in any school or indeed any forum in this state," he said.

A parent, who asked that his name not be published, said it would be a shame to see Mr Cundy's career ruined over the letter.

"He's a bloody good principal," he told AAP.

"The kids at school all respect him and all the parents respect him.

"I just think it was an in-house sort of joke which was probably in bad taste and he obviously regrets it.

"I'd hate to see the school lose a principal like that."

The NSW education department says it has counselled Mr Cundy about the "unacceptable" letter.