You have a dog who was not properly introduced to your daughter. And it will take some training on you and your husbands part. The dog is taking the Alpha role in the house and the baby is now challenging that role. It is up to you to make the dog realize that the people are the alpha and leaders. A great trainer is Cesar Millan, he has a great program on cable. "The Dog Whisperer" and a web site www.cesarmillaninc.com. He also sells tapes.
You have to challenge the dogs position and you will be surprised how fast the dog will let you be the leader. Put your daughter in the floor and block him from your daughter with your body and if he does near her, hold out your hand to block him and make a sharp noice, It can be a word NO, or a grunt or a shush. Don't use his name and dont repeat the command. Just a sharp noise and your body and hand to block. Create a circle around the child to show that the dog is to come no closer. Stay with it. It will take a few minutes for him to realize that there is a zone. Go about your business and if the dog goes near her then make the noise and get the dogs attention to block him from the zone. After a period of time, work on his other issues, With the block and the noise. Do NOT PET THE DOG when he is being bad, put him in the floor, ignor him and don't make eye contact with him. Pet only for good behavior.
After your pet discovers that the child is the pack leader he will be fine with her touching him but he is very small and fragil so you be sure she does not hurt him. It doesn't take much to break little dogs bones so some of his fear is being hurt so please protect him also.
The most important thing you can do is take him on some POWER WALKS. Leash, he walks behind you and close, you go out the door/gate first. If he runs ahead then he is the leader. If he continues to pull ahead, then simply reverse the direction you are walking so that you are ahead. Keep the lease up behind the ears so you have quicker control of the dogs head. Don't snap the leash too hard we don't want to hurt the guy just let him know that he is no longer the pack leader. It will take everyone in the family to keep an eye on the animal for a week or two until he gets the idea that he can relax.
Eventually he will consider everyone in the house the leaders. Put your daughter in the stroller and be sure the dog is walking behind the stroller. That puts the child in the leadership role.
good luck didn't mean to write a novel.