Collective Shout spokeswoman Melinda Tankard Reisttold told the Herald Sun the products were part of a trend to sexualise girls by treating them as older than they are.
"We're delighted that Kmart has acted so quickly, and once again this highlights the power of individuals to affect corporate behaviour," she said.
Child protection campaigner Hetty Johnston told the newspaper the Girls Xpress range, on sale in Australia and New Zealand, was "disgraceful".
"I really think that retailers have to understand that we don't like our children being sold for sex," she said.
They were aimed at girls 16 and older.
The underwear is just the latest in a long line of children's and baby clothes which sport slogans some see as questionable.
Two years ago, Cotton On Kids sold baby clothes featuring slogans such as "I'm a tits man", "The condom broke", "I'm living proof my mum is easy" and "Mummy likes it on top".
The company refused to withdraw the clothes, saying there was "a place in our society for provocative humour that pushes the boundaries".
In 2007, World released children's T-shirts emblazoned with "Future Porn Star", which designer Francis Hooper defended as "humorous and irreverent".
The year before, World had produced a range of T-shirts for Starship Foundation, a charity which supports Starship Children's Hospital.
In 2008, Jay Jays removed a range of T-shirts featuring slogans including "Mr Well-Hung" and "Miss Floozy" after criticism.
