Indianna Maddison was on a family holiday to Hurghada when tragedy struck four days before Christmas.
She was paddling on the top steps of a pool when she got out of her depth.
Dad Tommy Maddison said: “She waved at me from the steps and I think she got too confident or slipped, bless her.
“It happened so quickly, I heard screams and someone was pulling her from the pool.”
Desperate holidaymakers attempted to save her, and family friend Alistair Lee gave her CPR, the Northern Echo reports.
She was taken to a nearby hospital, where she seemed to be doing well, and doctors allegedly said it was safe for her to return to the UK.
Mum Kelly, 38, said: “She was breathing on her own, we thought we’d got her back.”
Tommy, 44, said: “I saw her smile at me. We were so sure she was going to be okay the kids saved her a seat at the hotel gala night.”
The little girl spent three days in intensive care before being flown back to the UK for treatment on Christmas Day.
The parents were then stunned to be told by medics at Newcastle’s Royal Victoria Infirmary their daughter had suffered major brain damage.
She suffered a heart attack and died the next day in her father’s arms, after he had read her a story.
The family say an air ambulance crew in Egypt feared Indianna had brain damage and it would be dangerous for her to board the plane home.
But they was overruled by the Egyptian hospital which said Indianna was fit to fly and made Kelly sign a waiver form, the family claim.
The family from Bishop Auckland, County Durham, is now hoping an inquest in Newcastle will provide them with some answers.
Tommy said: “We are in a world of pain.”
Indiana, the second youngest of the couple’s nine children, was laid to rest alongside sister Bobbie-Jo, who died from cot death 18 years ago.