PLEASE don't spank or shun your child for this behavior, it is VERY common in toddlers and needs to be dealt with in a firm and LOVING way.
Here is one of HUNDREDS of articles that may help. Do a google search on toddler biting and you will find many resources:
A worried mother asks, Today at our play group my son BIT my friends daughter! My friend acted like it was a normal childhood problem, and told me not to worry about it, but Im horrified! Why did my son do this? How can I prevent it from happening again?
Learn about it
Your friend has obviously had some experience with toddlers, and she knows that biting a playmate is common in this age group (perhaps her daughter has already been on the other side of the action.) Toddlers dont have the words to describe their emotions, they dont quite know how to control their feelings, and they dont have any concept of hurting another person. When a toddler bites a friend, it most likely isnt an act of aggression: It is simply an immature way of trying to get a point across, experimentation with cause and effect, or playfulness gone awry.
What not to do about biting
Many parents respond emotionally when their toddler uses his teeth on another human being; their immediate response is anger, followed by punishment. This is because we view the act from an adult perspective. However, if we can understand that a toddler bite is most likely a responsive reflex, we can avoid responding in the following typical, yet unnecessary and ineffective ways:
* Dont bite your child back to show him how it feels. He isnt purposefully hurting his playmate. He doesnt understand that what he did is wrong, so by responding with the same action you may actually be reinforcing that this is an acceptable behavior, or confusing him entirely.
* Dont assume that your child is willfully misbehaving. The ways that youll treat these behaviors in an older child, who understands that biting is wrong, will be different than how you will approach this with a toddler.
* Dont yell at your toddler. This will do nothing more than scare her; it wont teach her anything about what shes just done.
What to do about biting
When you understand that your childs actions are normal, and that they arent intentional misbehavior, you will be able to take the right steps to teach her how to communicate her anger and frustration. This takes time, and shell need more than one lesson. Heres how to teach your child not to bite:
* Watch and intercept
As you become familiar with your toddlers actions, you may be able to stop a bite even before it even occurs. If you see that your child is getting frustrated or angry perhaps in the middle of a tussle over a toy step in and redirect her attention to something else.
* Teach
Immediately after your toddler bites another child, look her in the eye and tell her in one or two short sentences what you want her to know, such as, Biting hurts. We dont bite. Give Emmy a hug now. That will make her feel better. Then, give your child a few hints on how she should handle her frustration next time; If you want a toy, you can ask for it or come to Mommy for help.
* Avoid playful biting
Nibbling your little ones toes or playfully nipping his fingers sends a mixed message to your child. A little one wont understand when biting another person is okay and when its not, nor is she able to judge the pressure shes putting into the bite. As she gets a little older, she will start to understand that some things can be done carefully and gently in play, but not in anger. This takes a little more maturity to understand ¾ more than you can expect your toddler to have at her young age.
* Give more attention to the injured child
Typically, we put all our energy into correcting the biters actions and we dont give the child who was bitten any consolation. Soothing the child who was bitten can show your child that his actions caused another child fear or pain. You can even encourage your child to help sooth his friend.
* The repeat offender
If youve gone though the above steps, and then your child bites again, you can respond with a little more intensity. If you catch him in the act, immediately go to him. Take him by the shoulders, look him in the eye, and firmly announce, No biting: time-out. Direct him to a chair and have him sit for a minute or two. It doesnt take very long for your message to sink in. (And, with a toddler, a longer time-out can dilute the message as he may actually forget why hes sitting there!)
If you miss the action, but are told about it later, you can have a talk with your child about what happened. Limit yourself to a few brief, specific comments, as a lengthy lecture is almost never effective. A child who bites a playmate more than once may need more guidance on how to handle frustration and anger. Reading toddler books on the topic, role-playing, and demonstration of appropriate actions can all help your child learn how to respond to his own emotions in socially appropriate ways.
I, the youngest by a few minutes, and one sister, the oldest by few minutes, used to bite the middle one. Our pediatrician told our mother she could not discipline us for it, it had to come from the bitee. So our mother told her to bite us back. At first she was too passive, so I think our mother put our hands in her mouth a time or two. After that she developed a taste for it 
