Terminally-ill baby Kaylee's condition has worsened after she stopped breathing several times on Wednesday night, her father says.

The two-month-old's father Jason Wallace told CP24 that Kaylee stopped breathing up to five or six times in an hour on Wednesday evening. Her family, who were about to make their way home to Brantford, Ont., have decided to stay and are on standby at the hospital in case Kaylee's condition continues to deteriorate.

Doctors have increased the baby's oxygen but have not put her back on a respirator, Wallace says.

Kaylee was unhooked from a respirator that doctors thought was keeping her alive last night, but the infant kept breathing on her own for an hour, prompting surgeons to cancel a heart transplant surgery.

"That was not our expectation, but that's what we've come to find," said Dr. Jim Wright, a surgeon working on the case.

Yesterday's development meant one-month-old baby Lillian O'Connor would not receive a heart transplant as planned. Lillian is also ill and needs a new heart to stay alive.

Lillian is at the top of the list to receive a new heart, Dr. Wright said.

The surgeon also said that since Kaylee was now breathing on her own, she is not considered a potential donor.

However, this is not what Kaylee's parents say they wanted to happen.

"This was not our wish and we're very upset about this," Kaylee's father Jason Wallace said on Tuesday, describing the ordeal as a roller-coaster and a nightmare.

"It's because we're trying to save a child, you know, our daughter's still here we love her, yes, but people must understand this is not completely about Kaylee ... it's about another child to be saved."

The transplant was never anticipated to be a straight-forward procedure. The transplant had to be performed quickly to prevent Kaylee's heart from becoming damaged from lack of oxygen while she died.

Wallace says his daughter's heart would have been removed if she had died within two hours of being taken off the respirator.

Kaylee was taken off life-support at 5:30 p.m. on Tuesday. Since then, she has continued to breath on her without a respirator. 

Kaylee has a serious brain condition that worsened to the point where she was unable to breathe without a machine. Kaylee's parents were told their daughter would die and wanted her heart to go to another baby.

Chief surgeon Dr. Jim Wright had said that both infants would be brought to a prepared operating room and if a legal death occurred where the donor baby's heart stopped beating for five minutes, surgeons would proceed with the transplant.

"If however, the baby does not die, then the donation of the heart will not occur," he said before the operation on Tuesday.

Mr. Wallace says he wants the hospital to try to transplant Kaylee's heart again.

Provincial Health Minister David Caplan says he will not interfere in the case.

With files from The Canadian Press