Psychologist Dr Vivienne Lewis, assistant professor at the University of Canberra, said it was an outrage Hollie Rizzotto and her child were subjected to such conditions because of their poverty.
"No-one should have to live in these conditions in Australia," she said. "This mother has obviously fought hard to move to a safer place to raise her daughter and it is appalling that her applications for better housing have been rejected.
"The stress and anxiety over safety and security that this mother must feel will undoubtedly take a toll on her and her daughter."
Studies had shown that children were heavily influenced by their environment both inside and outside the home.
"If their environment is unsafe in terms of drug use and violence, a young child is going to be negatively impacted," Dr Lewis said.
"Young children pick up on things very quickly. Parents may be doing all the right things inside the home, but once they open that front door if a child is exposed to profanity, hears violence or sees unsavoury behaviour then it's not uncommon, even for small children, to start to parrot that behaviour."
Dr Lewis said it was vital for Ms Rizzotto to move out of the complex for the sake of her daughter's development.
"It's quite important for her to try to get out as quickly as she can," she said. "It's potentially putting her child at risk, particularly if you don't know who is hanging around the hallways.
"If there are syringes around, if there are people taking drugs or behaving inappropriately or engaging in criminal behaviour then it's an unsafe complex.
"What we know is that children who grow up in these violent and unsafe environments, as they get older, are more likely to engage in that sort of behaviour themselves. They start to think that it's normal behaviour."
Early childhood expert Judy Daunt, of the University of Wollongong, agreed there were long-term negative effects on the development of any child living in an anti-social, unsafe neighbourhood.
She said there were detrimental implications for Ms Rizzotto's daughter because of her young age. Studies dating back 20 years show 85 per cent of a child's development occurs in the first three years of life - the fundamental foundation for lifelong learning, health and wellbeing.
"The mother [Hollie Rizzotto] cannot stay locked up in her unit and think that's the safest place to be," Ms Daunt said. "She needs to find a different community with other mums and babies.
"I think it's really dangerous for her and the child to stay there because of the child's social and emotional development. This is a family clearly under stress. The impact on the child's development will be significant.
"She is living in a complex that is not safe and when we are talking about the rights of the child, as outlined by the United Nations, children need to live in a safe and secure environment."
Research conducted by the Australian Institute of Health and Welfare in 2010 titled "Shelter" showed the effects of poor living arrangements and overcrowded housing on children did have a lasting impact.
The study referred to the World Health Organisation approach that inadequate dwelling conditions could trigger direct effects on health due to indoor air pollution and infestations. Insufficient play space within the home also increased parental stress and led to an overuse of television and obesity.
The study said poor social characteristics of a community could impede social interaction and make it hard to establish a sense of identity and self-esteem, ultimately affecting future socio-economic status, adult wellbeing and reducing a person's chances of accessing higher education.
"It's more about just providing a roof over heads," Ms Daunt said. "Adequate housing enables children to engage in the wider community. If we don't get it right in those early years we play catch-up for the rest of their lives in order for the child to grow into a functioning contributing person in society."
She urged Housing NSW to take a holistic approach when supporting families and protecting children, which she said should be the priority of all government departments.
"The department is a classic bureaucratic operation where they clearly don't have an understanding of child development," Ms Daunt said.