We can appreciate your concern about your little boy. When a little boy desires to dress as a little girl and play with little girls and their toys exclusively, it can be very troubling to parents. However, your son is not a homosexual. While gender-confused children may develop homosexual attractions in teen years if not helped, that is not the issue at this point.
The reasons why a child develops opposite sex characteristics and preferences to an extreme degree is complex. Whatever the causes, you would do well to emphasize that he should be exactly what God made him—a boy. Psalm 139:13-18 does a beautiful job of making clear God’s careful design for each of us.
It is also important to make clear that you are pleased that he is a boy and do everything possible to positively affirm the goodness of his being a boy. You (especially dad) need to be supportive of him, communicate love and acceptance, and gently help him (not force or shame him) with gender specific activities involving “boy” games, toys, etc.
A very useful chapter, “Rearing Masculine Boys and Feminine Girls,” by Dr. George Rekers can be found in the book “Recovering Biblical Manhood and Womanhood” by John Piper and Wayne Grudem. It is available through a Christian bookstore.
It would also be wise to seek the advice of a Christian counselor familiar with childhood gender-confusion disorders. For referral to individual Christian counselors, contact the following: Focus on the Family, telephone (800) 232-6459, or Narramore Christian Foundation, telephone (800) 477-5893.
Ultimately, the Lord is our hope and resource for every situation, no matter how perplexing. Remember that the Lord “is able to do exceedingly abundantly above all that we ask or think” (Ephesians 3:20).