Usually caused by fungal infection called {thrush}. The skin is red over diaper area & sometimes blistered. The infection is passed from mother to baby at birth. The cells of the mother's {vagina} contain fungus spores called {monilia albicans}. The spores are ingested during the passage of the baby through the {vagina} & enter the baby's intestine where they multiply.
During excretion, some of spores invade baby's skin & cause the typical rash. Application of fungicidal cream may be used to control skin condition, however re-infection occurs from the baby's intestine. Seek medical advice.
