Devon and Cornwall Police have confirmed they are looking into allegations of a recent incident at the nursery involving a child, which was reported by the family of the child involved.
One person has been arrested in connection with the incident and has since been released on bail until 27 August while the police and partner agencies continue to carry out enquiries.
Reports suggest parents of children at the setting have been sent letters from the nursery.
Registered to care for 52 children, the nursery was rated good in its most recent Ofsted inspection in 2016.
The setting received a notice to improve last month from Ofsted following an unannounced visit after the owner of the nursery notified the inspectorate about the alleged incident.
By 23 August, the provider is required to ‘ensure all staff, including designated safeguarding leads, understand and take account of all aspects of local safeguarding children board procedures, particularly with regards to allegations made against a member of staff'.
The provider continues to be registered with Ofsted.
Ofsted said it was satisfied that Jack and Jill has taken appropriate steps to ensure children are safeguarded.
A statement on the nursery's website says, 'Jack and Jill has been looking after children for 15 years. This allegation is devastating and our thoughts are with all concerned.
'The nursery is co-operating fully with the police, Ofsted and the local authority. As soon as the allegation was made, we followed our procedures and suspended a member of staff pending investigation.
'Ofsted has spent time in the nursery and is happy that we followed all the correct procedures. We have informed our parents and will continue to support them and our staff at this difficult time.'