An 11-year-old West Australian boy who pleaded guilty to raping an eight-year-old boy will not sentenced over the crime because he has been found mentally unfit to stand trial.

He had previously pleaded guilty to sexually penetrating a child and threatening to kill following an incident where he is alleged to have raped an eight-year-old boy in a local park at knifepoint in December, when he was aged ten.

Perth Children's Court.

A Department of Public Prosecutions lawyer told the Perth Children's Court on Friday that it had been decided to drop the case following a psychiatric report.

After learning of the boy's offences, concerned parents threatened to take their children out of the school if the offending child was not removed, leading the Department of Education to find alternative schooling for the boy away from other students.