Kirsteen Cooper, from Cambuslang, Glasgow, was accused of deliberately causing infections and cutting of the food supply tube to her daughter, Baillie.
Medics also wrongly reported the 42-year-old mum was trying to steal her daughter's blood to make her anaemic.
She was then arrested and put in a cell overnight and access to see her daughter was restricted for two years until the charges were finally dropped.
Speaking of when the police arrested her in 2017, Mrs Cooper told the BBC she "wanted to die" after being wrongly accused of murdering Baillie.
She said: "My first reaction was that I didn't want to be here any more.
"Baillie and my children are my absolute world, my complete life. So to be accused of anything, let along the worst thing you could imagine in the world, and the most special person to you in the world, you just feel like your life is not worth living if that's what someone can accuse you of."
According to the NHS, FII is a form of child abuse where a parent or carer exaggerates or deliberately causes symptoms of illness in the child.
Mrs Cooper told the BBC that her and her husband had made a complaint to the hospital because Baillie, who has cerebral palsy, was continually catching infections and they believed the conditions of the hospital to be partly responsible.
She said: "In February, Baillie's feeding tube leaked in hospital and they accused me of deliberately cutting her tube so she couldn't be fed.
"That night, social work appeared at Baillie's room and removed us from the hospital saying we were not allowed to be with her any more. And that went on for two years."
When Baillie was discharged from hospital she was sent to her aunts home and Mrs Cooper was only allowed to see her daughter for two hours at a time under strict supervision.
Mrs Cooper told the BBC her reason for pursuing a civil case is due to losing substantial time with her daughter in the last couple of years.
Lawyers for the Cooper family are expected to serve a writ on NHS Greater Glasgow and Clyde this week, reported the Daily Record on Monday.
Mrs Cooper said: "What we have all been put through as a family is unbelievable.
"The reason I want to pursue it is because the time and the memories we lost with Baillie we can never get back. Special times like starting school that we were not allowed to be on our own with her.
"We want to ensure this never happens to another innocent family. We want things to be put in place that before children can be removed from their parents, there must be some kind of solid evidence of why it is happening so children don't have to go through this trauma.
"We watched Baillie go through trauma every night in hospital for months - hysterical crying being taken away from us."