My dog is showing aggressive behaviour towards children!

My GSD is a 16 months old male. I live alone with one other dog a 4 year GSD bitch (spayed) I do not have any children. When I purchased my boy he had been brought up around young children and in the very important first few months of his life I spent many, many hours socialising him in every situation I could think of. But, as I do not have any children myself and no family living close to me with small children the only real interaction with children he got was with the ones we met in the street.When he was about 5 months old I visited my parents and my sister came round with her 3 young children of 5 years, 6 years and a new born baby. Unfortunately their entrance into my parents home was quite an excited one and my boy immediately starting barking at them in a nervous/aggressive way. Because of the age of the children and the way my boy reacted I immediately removed him from the room and put him in the car with my other dog. A little later when i went leave and my eldest niece came down to the car to say goodbye and once again my boy started barking.
I have very little if anything to do with young children and if ever when I'm out walking I happen to bump into anyone out with their children I always put my dogs on leads and move out of their way. Children can be just as unpredictable as dogs!
I was parked outside some shops the other day and people were walking past my car with young children and my boy went berserk, barking and throwing himself around. A few minutes later another young child went by and he reacted again aggressively.
How can I deal with this? There is no way I would ever let him close to a child with this behaviour. In every other way he is a very sweet, well balanced and adjusted dog. I am lucky enough to live in a very rural location so we very rarely bump into anyone whilst out walking. It does mean though that my sister can NEVER come to visit me with her children which upsets me greatly as I do not see enough of them anyway.
Any help and advice would be gratefully appreciated.
Thank x

I have an occasionally reactive GSD and no children. When kids are around she`s shut away or on a lead under close control.
If you intend for occasional children visitors, I suggest you arrange somewhere for her to be away from them while they`re young.
Alternatively you could work with the mother to desensitise your dog, but keep safety in mind always.
If my GSD goes backwards in her behaviour (as when she reacted to the car) , we go back to basics and revert to training on walks. (using a watch me command when people approach / rewarding when calm, asking for Sit in volatile situations etc.)
I use a Halti with my girl as you have far more control of the sharp end, and also it is easy to stop the fixed glare that comes before the lunge.

eta - remember dogs don`t know these short screechy, unpredictable people are our children! They are only mystifying new creatures to them.

Are you sure it 'child aggression' and not territoriality?

ie, Example 1*: above dog reacted to people coming into the home a bit full on - guarding the home?
There were children and adults in this scenario

Example 2*: guarding the car? Still aroused/stressed from ealrier incident above.

Example 3* There were children and adults in this scenario. Guarding the car?

Example 4*: still guarding the car, still aroused form earlier incident above.

This could be at the root of your problem also - socialisation and habituation wise

I have a Rottie x GSD who behaves exactly the same if she sees children and because I don't have any and my young grandchildren only pop round for an hour on the very rare occasion I now just put her in another room when they are here and don't walk her where there are children.
Its not worth the risk what a big powerful dog could do to them.
Also the children round here if she barks like to tease her and run at her barking which makes her worse so I find best to avoid them.