The toddler suffered head and body injuries during the attack in Toxteth, Liverpool, yesterday, police said.
Her aunt, who was also looking after two other children, fought off the dogs and carried the child away as neighbours ran to help.
She managed to get the other children, aged four and six, to safety.
The toddler was playing outside her aunt's house in Cockburn Street when the dogs from a nearby property managed to get into the garden. Police think they got in through the fence, the BBC reported.
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Five dogs and six puppies were seized from the arrested man's home. Two were put down, the report said.
Merseyside Police said the American bully dogs were not a banned breed.
Neighbours, who did not want to be named, said the dogs were being bred for sale.
One said she heard the girl scream as the dogs attacked her.
Another said she saw hers aunt run from the house carrying the girl, named as Ella, screaming: "The dog's got the baby! The dog's got the baby!"
Chief Inspector Dave Westby, of Merseyside Police, said: "This was a horrific attack which has resulted in a two-year- old girl suffering extensive injuries to her head and body."
Police said the girl was taken by air ambulance to a children's hospital.
Her aunt was taken to another hospital, where she received treatment for minor injuries.
The Dangerous Dogs Act was introduced in the UK in 1991 in response to a spate of dog attacks.
The legislation made it a criminal offence to have a dog 'dangerously out of control' in a public place.
Currently the banned types are the Pit Bull Terrier, Japanese Tosa, Dogo Argentino and Fila Brasiliero, according to media reports.
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