E.M.
It could also be eczema. Have you tried moisturizing? Daily washing could actually exacerbate the situation. My second was (and is, at 3.5) very rash-prone. Oodles of a good lotion usually does the trick. There are also some viruses that come with a rash, which I am sure you know if you have 2 others, so keep an eye out for fever or other symptoms.
And detergent, fabric softeners, or dryer sheets can cause skin irritation, possible culprits. Because if you are on baby #3, I know for darn sure you aren't using expensive "baby detergent." Dye-free, fragrance-free anything is usually fine.