Ava-Jayne Corless, who was just 11 months old, suffered horrific injuries when the American pitbull terrier attacked her while she slept.
Her mother, Chloe King, 20, and boyfriend Lee Wright, 26, heard the commotion and rushed upstairs to rescue her from the jaws of the beast.
Paramedics were called and took Ava-Jayne to hospital where doctors were unable to save her life.
Miss King and Mr Wright were questioned on suspicion of manslaughter and child neglect, and were today released on bail.
Lancashire Police said: 'The two people arrested in connection with the death of Ava-Jayne Corless at Blackburn have both been released on bail pending further inquiries.'
A police spokesman said last night that the animal was banned under the Dangerous Dogs Act of 1991.
Senior officers have launched an investigation into reports that neighbours had called Lancashire Constabulary to complain about dangerous animals at the property in Blackburn.
Faisal Shahzad, 35, fled after two dogs broke through his garden fence. 'I had to run quickly into the house and barricade the door because they were tearing after me,' said the taxi driver.
'I've got three children and they were all in the house absolutely terrified. The two dogs were scary. I called the police and they said something would be done and my neighbour also called the RSPCA.'
Another neighbour, 80-year-old Brian Harrison, said: 'That dog was a nightmare for neighbours and people were worried about approaching it.
'It's an absolute tragedy that should never have happened.
'Only last year it mauled to death a neighbour's cat and nothing was done about it.'
Kyle Perry, 19, was chased down the street by the dog. 'It was a big dog and it used to just bark and bark,' he said. 'I have been chased by it down the street. It was terrifying.'
Blackburn MP Jack Straw said: 'What will it take to convince people not to keep dogs like this - and to get across to all dog-owners, of every breed of dog, that no dog should ever be left unsupervised with a baby?'
The incident happened at around 11pm on Monday while Miss King was visiting Mr Wright at his home 40 yards from hers.
The pair are understood to have put the baby to sleep in a bedroom and were watching television downstairs when they heard the attack begin. By the time they reached Ava-Jayne she had suffered catastrophic injuries. The dog was destroyed.
Chief Superintendent Chris Bithell said previous contact with neighbours would form part of the police investigation.
Last night, police said the dog had been identified by experts as a pitbull.
Owners cannot be prosecuted for dog attacks on private property until new legislation comes into force this spring.
Tougher sentences will be introduced under the Anti-Social Behaviour, Crime and Policing Bill.
Rachel Cunningham, of the Blue Cross animal charity, said: 'We can only hope the Government's planned changes to the bill will allow authorities to step in at the first sign of a dangerous dog and help prevent terrible events like this.'
Jennie Rudd, of animal welfare campaign group Naturewatch Foundation, said dog attacks were caused by irresponsible owners.
She added: 'If it has aggressive tendencies it is the owner's responsibility to make sure it never gets near a child, and that it isn't forced into situations where it feels it has to attack - because there is always a reason for a dog to bite.'
Last night Ava-Jayne's father, Dean Corless, 24, said he was devastated by the tragedy: 'I rushed to the hospital to see her straight away.
'She was the most beautiful and adorable little girl, she was just the best. She was my whole world. Her mum and I aren't together any more, but I saw Ava-Jayne all the time. I will miss her every single day, I just don't know what to do now.
'It is just so tragic. I have my family around me now, but we are all devastated.'
The RSPCA confirmed the charity had been contacted after a dog at the address killed a neighbour's cat.
The death was treated as an accident with no action taken.
Britain's Tragic History of Fatal Maulings by Devil Dogs
In November last year, four-year-old Lexi Branson was mauled to death by a pet dog despite her mother's desperate attempts to halt the attack. Lexi, described as a 'happy and sweet' girl, died after being attacked at a flat in Mountsorrel, Leicestershire. It later emerged that the dog had been a stray until a couple of months earlier.
In June 2013, a five-year-old boy was taken to hospital after being mauled by a dog in Co Antrim, Ireland. The attack happened at Carniny Primary School on the outskirts of Ballymena. It was later confirmed that the dog was being shown to schoolchildren as a last-day-of-term treat.
Last May, Clifford Clarke, 79, was killed in a dog attack in his garden in Liverpool. The retired hospital porter suffered fatal injuries after being mauled by a bull mastiff cross which was reported to have found a way into Mr Clarke's garden from a neighbouring house. The dogs was shot dead by armed officers and two women were arrested on suspicion of manslaughter.
Two months earlier, Jade Anderson, 14, was mauled to death by four dogs while visiting her friend near Wigan. The girl was discovered by armed police at a friend's house amid a pack of aggressive dogs. The animals, who were not banned breeds, were put down. The owner of the animals was given a suspended 16-week sentence for animal cruelty last month.
In November 2012, 71-year-old Gloria Knowles died after being attacked by a pack of dogs belonging to her daughter that she had gone to feed. The great-grandmother was found dead with multiple injuries at a house with five dogs in Morden, south London.
In March 2011, Jude Keir, nine, suffered severe head injuries when he was mauled by a Staffordshire bull terrier outside his school in Scotland. The young boy needed 40 stitches and only survived because two people dragged the dog off him.
In November 2009, four-year-old John-Paul Massey died after suffering multiple injuries when he was savaged by the family pet at his grandmother's home in November 2009. The animal, named Uno, was an illegal pitbull-type dog belonging to his uncle, who was jailed for four months.
PITTBULLS NEED TO BE BANNED WORLDWIDE. They are nothing more than killing machines waiting to 'go-off'. Why anyone would want to have one of these menaces as a PET is beyond me, especially in a home where there are young children. I'm delighted to see the parents are being held responsible and being charged with manslaugter, but it doesn't bring back that beautiful innocent little girl who was MAULED IN HER SLEEP BY THE FAMILY PET. I'm trying so hard not to have to picture what that little girl's last moments must have been like......and so many other children and people who are so savagely attacked by these 'PETS', which very few people survive, and those that do come away needing hundreds of stitches and reconstructive surgery. Google image 'bittbull attacks'......there are thousands of pictures of these devil dogs' victims.....most of whom are children. Strange how they mostly go for the most innocent. Pittbulls have shown over and over that they DO NOT NEED A REASON TO ATTACK.........THEY JUST DO IT, AT ANY MOMENT.