The invention relates to a low-odor high-performance anti-stain latex paint composition capable of decomposing formaldehyde and a preparation method and application thereof, and specifically, the invention discloses a water-based latex paint composition comprising 20-60 parts by weight of styrene acrylic acid copolymerization emulsion, 10-40 parts by weight of titanium dioxide, 0.5-30 parts by weight of diatomite, 0.5-15 parts by weight of kaolin, 0.1-10 parts by weight of a hydrophobic additive and optionally 0.05-5 parts by weight of a poly phosphate wetting agent. The invention also discloses the preparation method and the application of the water-based latex paint composition. The emulsion paint composition has the characteristics that the content of volatile organic matters is basically zero, the formaldehyde can be thoroughly and effectively decomposed, the emulsion paint composition can effectively resist stains, and is very environmentally-friendly practical children paint.