Excerpt from  Natural Baby and Childcare

Oatmeal Baths can be soothing for children with hives, as well as relieve dry skin, minor burns, and other sources of itchy rashes. Commercially prepared packets of colloidal oatmeal can be purchased or you can easily make your own.  (Colloid means that the oatmeal has been pulverized into a fine powder so that it is completely absorbed in the water.)

To make your own, place 1 cup of unflavored oatmeal (slow or quick) in blender, processor, or grinder.  Place at high setting until oatmeal is ground into a fine powder.  As a test, stir 1 tablespoon into a glass of warm water and stir. You know you have blended it long enough when the water turns milky and feels silky.  With the tub of running water, slowly sprinkle in the blended oatmeal.  Use 1/3 cup for infants, and 1 cup for children. With your hand make a figure eight in the tub to insure dispersion.  Be careful as the tub will be slippery!  Soak up to 15 minutes, using 1 to 3 times a day as needed.