Archie Besau was bitten on the face by the patterdale terrier after he wandered from the living room into the kitchen where the terrier was asleep at his mother's friend's house.
The little boy was left with a two inch gash on his right cheek and a chunk of skin between his nose and lip was hanging off and had to be stitched back on.
The attack has left him scarred for life, according to Archie's horrified grandmother, who said the dog had previously attacked other members of the owner's family.
Despite the horrendous wounds inflicted on Archie, the dog's owners did not have the animal put to sleep and police say they cannot take any action because the incident took place in the dog's home.
The attack happened at the home of Shelley McTiernan in Lupset, Wakefield, while Archie and his mother, Rachel, 24, also from Lupset, were visiting.
She said: "Suddenly we could hear the dog attacking him and he screamed out. It was horrific, his lip was practically hanging off.
"He was still screaming his head off in the ambulance. Normally a dog would get put down for biting a person but the police told me they can't do anything as it was in its own house. It's disgusting.
"If it had been a person that had bitten Archie it would all be different. It seems dogs have more rights than humans do."
The dog's owner said she took the dog to the RSPCA following the attack but she could not bear to have it put to sleep.
Instead it was given to a family without children.
She said: "He's a loveable dog and I treated him like a baby. My children are heartbroken and emotionally we just couldn't put him down. But I'm horribly devastated and mortified by this tragic accident.
"I always make sure the dog is in the kitchen when children are around. But Archie wandered off unsupervised and disturbed him while he was sleeping."
Inspector Sally Fryer, of the local neighbourhood policing team, said the bite was not considered an offence under the Dangerous Dogs Act.
She said: "If the dog had run out of its owner's house and bitten someone it would have been an offence."
Archie's grandmother, Donna Besau, 49, said medics had told Archie's mother that he will probably have permanent scarring on his cheek and the area between his nose and lip.
She said: "My daughter called me and I rushed to the hospital. When I walked into the room Archie turned round and when I saw the state he was in I burst into tears.
"I couldn't believe what I was seeing and that such a little dog could do so much damage."
Although the attack left Archie with serious facial injuries, the dog narrowly missed Archie's left eye.
Ms Besau, of Wakefield, said the dog had attacked other members of the owner's family but that her daughter had assumed the animal had been locked in the kitchen.
She added: "It's disgusting that the owner has not taken responsibility for her dog, especially as this is not the first time he's attacked someone.
"The law should be changed. Any dog, little or big, should not be above the law. It should be put down.
"You don't expect little dogs to do this kind of thing but I want to warn people that it's not always huge vicious dogs that cause these injuries.
"Parents and owners need to be vigilant. Poor little Archie will be left with permanent scarring."
Archie's stitches have now been taken out and he returned to the hospital yesterday for a check-up.
DANGEROUS BREEDS TARGETED BY ACTS
The Dangerous Dogs Act 1991, as well as banning certain breeds, covers any dog which is out of control – but it only applies if the animal is in a public place or somewhere it is not allowed to be.
The Act has been criticised by animal charity RSPCA for "demonising" individual breeds even though all breeds are capable of attacking people.
The former Labour government pledged to crack down on dangerous dogs and proposed to fit every dog with a 30 microchip. The new Government has ditched the plans.