When Maddy Dugdale was taken to hospital with breathing problems, her mother was told to take her home and give her Calpol and Nurofen.
Within hours the three-year-old was dead, and last night her family said they were considering legal action over her death.
An inquest heard that medical registrar Syed Akhtar assessed Maddy at the Royal Gwent Hospital in Newport, on February 13, 2005, and diagnosed a respiratory tract infection, prescribing an inhaler to help her breathe.
Her mother, Lara Williams from Risca, was told to continue giving her daughter Calpol and Nurofen, and they were then sent home, where they arrived at midnight.
Mother-of-three Miss Williams, 28, slept in the same bed as Maddy that night, and said her daughter was restless, and complained that her "voice was hurting".
But the next morning, Miss Williams awoke to find Maddy lifeless and cold beside her, and she was later pronounced dead at the Royal Gwent Hospital.
At an inquest yesterday, coroner David Bowen said it was "every mother's worst nightmare".
Checks on Maddy before she was seen by Mr Akhtar the night before she died had revealed a pulse rate of 180 beats per minute and a temperature of 38C, but he did not repeat the tests himself.
When asked by Kathryn McConnochie, counsel for Miss Williams, if in hindsight Maddy should have been kept in overnight, he replied, "Yes."
Mr Bowen said Mr Akhtar had given Maddy an extensive examination and the correct diagnosis, but the consequences of that had been "underestimated".
He recorded a narrative verdict, saying, "Maddy Dugdale died in her sleep on February 14, 2005, from acute viral tracheo bronchitis, the severity of which was underestimated when it was diagnosed at hospital the previous evening, and she had been allowed to return home."
Ashok Vaghela, clinical director of the A&E department at the Royal Gwent Hospital, told the inquest that procedures for assessing children had now changed, and that Mr Akhtar had undergone a training course.
Speaking outside the inquest, Miss Williams, who has since separated from Maddy's father, said, "She definitely should have been admitted to hospital. Whether the outcome would have been the same, we'll never know. They failed me and my daughter."
Maddy's father, Martin Dugdale, 41, said, "[Lara] did everything right. She did everything a mother could have done but we feel we've been let down.
"[Maddy] wasn't treated the way she should have been - the way any three-year-old child should have been."
He added, "It's two years down the line and it's not just myself or Lara - most of the family are suffering. From day to day nothing improves.
"Maddy was a bright, normal three-year-old child. I'm biased, but just like any father a girl's the apple of your eye and she was beautiful. She was so bright and bubbly."
Maddy's parents were last night considering legal action against the trust in a bid to prevent similar tragedies in future.
He said, "We're still suffering from our loss and will never get over it but we would hate to think of it happening again to another child.
"Gwent say they have made changes but why has it taken my child's death to implement these changes?
"We don't feel she was given the right treatment when she was here and we just don't want her to be another statistic."