Pauline Hutchinson (34), of Old Dalby, buried her daughter, Sunshine, in the Thorpe Road graveyard in May 2014 after she passed away when born prematurely at 32 weeks.
Shortly afterwards, another child was laid to rest in the adjoining plot and a large headstone put in, together with a small bordering wall.
Pauline complained to the borough council, which manages the cemetery, that there was not enough space between the graves.
She wants to move her daughter’s grave to a new section of the cemetery set aside for babies but has accused the council of dragging its heels over the move despite having regular contact with officials.
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Pauline said: “It’s upsetting because the plot next to Sunshine’s is on top of her grave and it feels as though it is squashing her.
“There isn’t enough room between the graves like there is with all the others here.
“I would just like people at the council to think how they would feel if it was their daughter buried there.”
Pauline used to visit Sunshine’s grave regularly with partner Garry Rawson (42) and their four other children - Warren (10), who is awaiting a liver transplant, Declan (7), who has impaired vision, Logan (11) and four-year-old Preya.
But she said it was now too distressing for her to visit until the child’s grave is moved.
After returning to the plot for the first time in nearly two years this week, she added: “I used to come every day but I just can’t look at this anymore without getting upset.
“I would like to move her now because I need some closure.”
Melton Council said it had spoken to Mrs Hutchinson several times and it would do what it could to resolve her issue.
A spokesperson said: “We could either centralise her child’s plot so there is more space either side of it or we could move it to the new section for babies nearby.
“She would have to make a complaint about her situation in writing and we can then discuss the next step with her.”