I know it's probably hard for you but she is just a kid, at that age knickers are fine, I even remember we used to run around nude under the hose with friends no one made a big deal. You will embarrass her and could trigger body issues if she is a big girl. I agree that talking to her mum might be a good idea. Your family shouldn't have to hide, just remind them she is a little girl like your own dd and it's no big deal.