It seems that John Macklin published a book in 1965 called Strange Destinies, where he tells a story based on the Children of Woolpit but moves the setting to the fictional village of Banjos, Spain. I would guess that this is the version the song is based on.
Pwgabachito--thank you for the lead! The link wasn't working for me so I did a little research and came up with a Wikipedia article on the Green Children of Woolpit: http://en.wikipedia.org/wiki/Green_children_of_Woolpit as well as this forum: http://imaginativeworlds.com/forum/archive/index.php/t-6901.html
It seems that John Macklin published a book in 1965 called Strange Destinies, where he tells a story based on the Children of Woolpit but moves the setting to the fictional village of Banjos, Spain. I would guess that this is the version the song is based on.