L.S.
I don't work at home (yet), but have a few suggestions.
Why don't you give yourself an hour or 2 to 'play hookie'? That way you may not feel as tempted or distracted. Maybe keep a log of your hours to keep yourself accountable.
How old is your little one? Are they old enough for preschool? What about setting up a little desk for him/her to do some "work" as well? You could stock it with different coloured papers, crayons, felts, scissors, glue, stickers, etc and let them go to town. I know that keeps my girls occupied for a good 1-3 hours, depending on their moods. Also, puzzles that they could do quietly on the floor of your office or maybe get him/her a few very special toys that they *really* want that are ONLY for playing while mommy is working; something you know will keep their attention. My girls adore those 4'' princess figures - I don't hear from them for hours when they've got those out.