Understandably you are anxious in this situation which Daisy also picks up on which in her mind reinforces that she has something to be worried about - a vicious (no pun intended) circle.

I would follow applesmom's advice - it may take a very long time but if Daisy senses that you are relaxed around children she may well start to accept them. Ignore her negative behaviour and praise the positive to the heavens.

Any idea what caused this in the first place?