Hi, kats.
You don't say what time of the year you're considering visiting and that's important because, whilst some resorts would have adequate facilities to entertain your youngster in high season, they quieten down considerably out of season and might not be suitable.Let us know roughly when you're thinking of going and we'll come up with some recommendations.

Hi,We are going around the middle of july, does it get really hot then?,Thanks,Kathryn

Yes, it's likely to be in the high 20's or low 30's centigrade :sun, but the good news is that all resorts will be in full tourist mode with street entertainers etc.
From what you say, I think maybe Lagos might fit the bill;it's a working town which has encompassed tourism without losing it's Portuguese authenticity and, whilst the entertainment is not 'in your face', there will be plenty to interest your family. At night the cobbled streets will be full of entertainers - fire eaters, jugglers, human statues and musicians ranging from classical violinists to pop guitarists and vocalists, and there's usually a small carousel for the kiddies in one of the town squares. The Portuguese are very fond of children, so your daughter will be welcome in all the restaurants and shops.During the daytime you'll have a choice of beaches from small coves with beautiful rock formations to a vast expanse of sand which stretches as far as the next resort to the east - Alvor, and there are various pleasure boat trips available from the Marina - trips to the grottos, sunset barbecue cruises or high-speed dolphin safaris. There is also a local bus service to take you as far as Lagos' Zoo if that's the sort of thing you enjoy.Lagos has excellent bus and train connections so travel to other parts of the Algarve is straightforward.
If Lagos appeals to you and you wish to pursue it further, just ask and we'll point you towards some hotels which are likely to suit your needs.

Hi,Lagos sounds just what were looking for,Thankyou.Looking forward to hearing from you,Kathryn

4*ish and child friendly... Well, they're all child friendly and the reasonably central ones are The Tivoli Lagos, the Albegaria Marina Rio and the Marina Club hotel.
The Tivoli is a large, rambling hotel, designed to feel more like a village, and has its own beach club accessed by its own complimentary bus; more detail here:http://www.tivolihotels.com/hotels-portugal/destination/algarve/hotel-lagos/list.aspx
The Marina Rio is a smaller hotel situated on the Avenida - the waterfront road, and adjacent to the bus station ( best views from the front rooms but there's a trade off in that there could be traffic noise from the Avenida.) Detail here: http://www.marinario.com/uk/apresentacao.htm
The Marina Club is a relatively new development and, as the name suggests, situated on Lagos' Marina, though probably less traditional than the other two places.More detail here:http://www.marinaclub.pt/
All three hotels are well placed for access to transport and to Lagos itself. Just shout if you need more info.

Hi,Thanks alot for the info.I've been through the Hotels and we've decided on the Tivoli,its sounds like our cup of tea!.
We're going to book it and then start looking forward to it,I carn't wait now.
Thanks again,you've been wonderful,Kathryn

Didn't want to influence your decision too much, but thought the Tivoli would be the best option for you. Just a couple of things that might be of use to you: tell hubby that the price of a large beer ( Caneca ) there is extortionate ( €4 ) during the day, but, during the two hour happy hour in the evening, comes down to a fairly reasonable €2. However, at the bottom of the drive to the hotel is Luis' bar where prices are consistently reasonable. Also near the bottom of the driveway is a restaurant named Christian's Kitchen which is highly recommended. Christian, the owner and chef, used to be a chef for the Sheraton group of hotels and the food is superb, although whether or not they do a children's menu, I'm afraid I don't know.
Second thing is that, at A Duna, the hotel's beach club, the wickerwork double loungers are, I believe, €50 per day with a bottle of Champagne included; ignore these and strike a blow for the common holidaymaker - the plastic ones on the beach directly in front of the Beach Club are free to residents. Don't let these two warnings put you off - other than these two thing prices are normal 4* level and I'm sure you'll enjoy the Tivoli.
Don't forget - any more questions, just ask !!

Hello Sagres, we went into Luis bar for a beer before we went on for a meal at night, as you say they have a happy hour and only paid 2.50 euros for a pint and a half and they play some good music. There was a lot of people from the hotel Tivoli in there most nights, and in the bar next door (same owner) they have singers,quiz night and Karaoke if this is your thing with the same price for there beer.
I see you also put about the hotel we stayed in to try for (kats) the Marina Rio, well this is a very nice hotel but have to say that when we were there, there was not one child all couples the pool is only very small more of a cool down dip than a pool, and only a roof top sun deck with about 10 sunbeds and no entertainment in the small bar or in the day.
So I would have to agree with you and go for the Tivoli.

Dave.

Hi,Thanks alot,I appreciate your help,were definetly going for the Tivoli as it sounds so nice.I'll be writing my report when we get back.Thanks again,Kathryn

We just returned from a lovely holiday in Lagos. Stayed in the Montemar Hotel, small portugeese hotel which was ideal for a couple. Staff all very friendly. Towels changed daily and bedding three times in the week. Continental breakfast in a room in the basement. nothing wrong with food provided, room a little drab. Would have made all the difference if you could have had breakfast on the outside terrace outside the bar. No pool but just 10 minutes walk to the beach, or cross the river on the little boat to the beautiful long beach. 10 mins into town. Never had a bad meal in our stay.