It is excema. And while using the cortisone cream will work it is only a temporary fix. Cortisone cream is a steroid cream and over use will cause that area of skin to become thinner and weaker and more susceptible to rash. It works because the steroid causes the rash to calm down and the inflammation to go away. This a very basic steriod explanation.
My first dd suffered with excema and we discovered that we had to switch everything to all free and clear, no more chemical filled lotions or body washes (www.cosmeticdatabase.org) is a great site. The biggest factor in dealing with excema is getting it under control and then keeping it that way. So start using a lotion on your daughter. We used the eucerin claming cream as well it worked great but we wanted to something more natural so we moved on...after the excema was under control and GONE.
Here is how we got in under control and kept it that way through very dry cold winters and hot summers.
All laundry in the free and clear. your clothing touches her body as well.
Dr Bronners baby mild soap. We bath every day, this helps wash any allergens/irritants off the skin and allows the skin to be free of dirt/irritants so that you have a clean "surface". I am assuming your lo has no hair but if she does and you are using a seperate shampoo/condish you must switch to something like california unscented babies, or aubrey organics. Bath with the soap nightly in a tepid to warm bath water. Heat will aggravate the excema causing it to flare up. after you drain the water rinse her body off with clear clean water to make sure any residue from the soap is gone. The dr bronners is a castile soap so it doesn't leave behind allergens to further irritate the skin.
Pat the baby dry, do not rub hard etc or you will again aggravate the skin. While baby is still slightly damp from the bath apply tiny amounts of cortisone cream to the bad patches of excema. then apply lotion to the skin. The eucerin will work great here. Or use california unscented babies lotion either is great.
Do this for 2 weeks. As soon as you notice the excema patches reducing in size and redness wean slowly away form the cortisone cream using less and less only ever use the tiniest amount you can for the area. once the patches are gone continue doing this forever. lol.
DO NOT change the soaps/lotions etc.for at leat 2 weeks. If you use lotion on yourself stop and begin using the same as your baby for the time being her checks and body is all over yours so you are just putting those irritants back onto her. It takes along time (min. 2 weeks) for the excema to clear up or begin to clear up. If after 2 weeks you notice absolutely no changes you need to evaluate the babies diet. Remove the most common allergens from thier diets (if they are nursing you must remove them from your diet as well.)
Since she is so young I am assuming its not so much diet as it is skin irritaion. The johnsons lotions, vaseline etc do nothing for the skin besides leave a chemical cocktail on thier skin. Read the labels, google the ingredients and understand what they do (www.cosmeticdatabase.org) is a great resources to check the safety of ingredients and products, type the name into the search engine and read all about it.
Babies skin is 10x thinner than our (or 100x I can't remember lol) so it absorbs things faster into and its also more delicate so things irritate it more (example being this is why babies are more prone to heat rashes then adults) you have to cleanse it and help keep it hydrated.
I battled this problem with dd1 for over 2 years before I finally found this routine and all this info so I am really glad to be able to share it with you guys hoping it will help. If you have any questions please pm me I would love to try to help in any way. My 2nd dd has not had a single skin problem yet since she has been on "the routine" since birth basically....