I was told to use tea tree conditioner whilst in the bath. Put shedloads of the stuff on, comb it through with a nit comb, and if at all possible leave on for as long as possible. I did this last summer with mine, and just left the conditioner in her hair (did it on a warm day!) through the day, plaited.
Apparently nits hate tea tree?
Is your daughter treating the entire family? If not, she should be, and so should anyone else who's had contact with your grandaughter, inlcuding you. Also bedding and anything else she might lay her head on.
Has play group or nursery, or where she got them from been informed?