One important element in a dog's life is his need for a pack hierarchy. The first thing you must do to assume leadership with your dog is take your dog to obedience school. An ill behaved dog is a threat to your children, plain and simple. You cannot control your dog around your children if he doesn't know or won't obey basic obedience commands. Include your children in setting these rules so that they know what the dog is allowed to do and what it is not.
Consistency is very important.
Everyone must agree and hold the dog to the same set of rules. Teach your dog the rules by firmly but gently disciplining him for breaking them and lovingly praising appropriate behavior. Do's and Don'ts Dogs interact with children differently depending on the child's age. Under 2 Children under the age of two really aren't aware of the dog as a real presence. Although they may talk to the dog and call it by name, the dog doesn't really mean any more to it than a stuffed animal.