Chances are not much (if any) of what this bully is saying is true, but if she knows it's upsetting your daughter, then she's likely to continue - that's the payoff for the bully.
Not trying to minimize it, but there is an episode of "Little Bill" on Nick Jr./Noggin that deals with this. I can't remember the title of the episode; it might be called "The Meanest Thing to Say". A new kid to the school wants to play "ranking" - saying the meanest thing to someone until they win because the other kid gets upset. Little Bill's father asks him if the things are true, or if they hurt his feelings; no. Then just say, "So..." every time they say something. When Little Bill does this, the other kids start to giggle because the bully starts to say worse things and keeps getting told, "So?" until the bully says, "Hey, you're supposed to be upset...why aren't you crying?" And the other kids ask him why he kept saying, "So?" Little Bill tells them it's because nothing he said was true or made him cry, so why not.
Just in case - here are some websites that might help:
Stop Bullying-Guidelines for Schools http://www.nobully.org.nz/guidelines.htm
Stop Bullying Now http://www.cary-memorial.lib.me.us/bullyweb/index.html
Education World-Bullying Interventions That Work
http://www.education-world.com/a_issues/issues103.shtml
Bullying In Schools & What To Do About It by Dr. Ken Rigby
http://www.education.unisa.edu.au/bullying/
Blueprints for Violence Prevention: Overview of the Bullying Prevention Program
http://www.colorado.edu/cspv/blueprints/model/ten_bully.htm
Safe Child Program-Bullies
http://www.safechild.org/bullies.htm#TAKE%20A%20STAND
Kentucky Center for School Safety
http://www.kysafeschools.org/2 ndry/resources.html
Safe Schools, Safe Students http://stwnews.org
Don=t Laugh At Me http://www.dontlaugh.org
National Resource Center for Safe Schools http://www.safetyzone.org/publications/fact4_index.html
National School Safety Center http://www.nssc1.org
Bully OnLine http://www.successunlimited.co.uk/child
Hurt-Free Schools http://www.bullying-in-school.com
Ophelia Project http://www.opheliaproject.org
Kansas Bullying Prevention Program
http://www.kbpp.org
Bully Stoppers.Com http://www.bullystoppers.com
ERIC Clearing House for Counseling and Student Services (ERIC/CASS)
http://ericcass.uncg.edu/virtullib/newlibhome.html
Bully B=Ware http://www.bullybeware.com
Maine Project Against Bullying http://lincoln.midcoast.com/~wps/against/bullying.html
Committee for Children http://www.cfchildren.org/bully.html
Nature and Prevention of Bullying http://www.gold.ac.uk/tmr/
Bullying Online http://www.bullying.co.uk/
Bullying.Org http://www.bullying.org
Anti-Bullying Network http://antibullying.net/
Colorado Institute for Conflict Resolution and Creative Leadership
http://weinholds.org/bullyindex.htm
Anyway- for what it's worth, and good luck!