The University of Sydney study involving 1,492 primary school children found that those who spent hours glued to the screen suffered narrowing of blood vessels in their eyes -- an early warning sign of increased likelihood of heart disease and high blood pressure.
However, those who exercised at least for one hour a day were significantly healthier, said the researchers.
For the study, Dr Bamini Gopinath and her team included 1,492 six- to seven-year-old children in 34 primary schools in Sydney.
Their parents were also asked to report the amount of time the children spent watching TV, playing video games, reading and engaging in indoor and outdoor physical activity.
The scientists then took digital photographs of the blood vessels at the back of each child`s eye and calculated their size. They also measured height, weight, body mass index and blood pressure.
It was found that on average, children spent 1.9 hours per day watching TV or playing on their computer and only 36 minutes doing physical activity.
They had an average "retinal arteriolar" narrowing of 2.3 microns But those who regularly participated in outdoor physical activity had retinal blood vessels that were 2.2 microns wider
"We found that children with a high level of physical activity had a more beneficial microvascular profile compared to those with the lowest levels of physical activity," Dr Gopinath said in a statement.
"This suggests that unhealthy lifestyle factors may influence microcirculation early in life and increase the risk of cardiovascular disease and hypertension later in life."
However, she said that replacing one hour a day of screen time with physical activity could be effective "in buffering the effects of sedentariness on the retinal microvasculature in children".
"Free play should be promoted and schools should have a mandatory two hours a week in physical activity for children," she added.
The findings are published in the Arteriosclerosis, Thrombosis and Vascular Biology: Journal of the American Heart Association.