Dogs are known to do that. It isn't going to hurt it, but you should try to discourage that kind of behavior.
"It is important for dog owners to know that this behavior is normal for a mother dog with
pups," adds Dr. Eurell. Newborn pups must learn to urinate and defecate. The mother
teaches the pups by licking their bottoms. The pups respond to this "tickle" by urinating and
defecating. The mother then consumes the pups' excrement, which serves two protective
purposes: it keeps the den area clean and it removes smells that could attract a predator.
Some pups learn this behavior from their mothers and will stimulate themselves and
consume their own feces. Most pups stop by the time they are weaned.
It is more difficult to understand why adult dogs eat feces. Some dogs will learn this
behavior from other dogs. In some cases, eating feces may be an attention-seeking
behavior. For some dogs it is possibly due to anxiety or boredom. Most often the
motivation for eating feces is just not known.
From:
http://www.cvm.uiuc.edu/petcolumns/s...cle.cfm?id=166