Okay! It's that time again, I'm probably going to be asking a hell of a lot of questions but that's why you're here hey?

Okay, my son is 3 months old now and he is much more playfull, when we put him on the bed he grabs everything, so now, Spud (our dog) has also become more aware of my son, now I don't want to discourage any interaction between them cause I fear Spud might start feeling left out, I'm just confused as to what behaviour is acceptable from the Dog's side, right now he gets very excited, sometimes too excited and he tries to stand on the baby's chest and lick his face, what interaction should I allow between them, and if something is unacceptable, how do I let the dog know without making him feel he's not allowed around the baby at all? Thanks guys

Standing on your child's chest is completely not acceptable, that seems that the dog is showing dominance over your child, and that is not a good thing.
I have to cut this short (work day calling) but you really have little choice when it comes to the safety of your child, you have to limit interaction and very closely monitor the interaction they do have.
What kind of dog is Spud?

Spud is a jack russel. Right now interaction between them is sniffing and licking. He sniffs my babie's hands and takes them in his mouth (very softly). Or he licks the hands, he grabs the feet, I only scold when he comes near the face, but like I said I don't want him feeling like he's being left out.

Jack Russells tend to forget, at times very conveniently, who the pack leader is and you are going to have to keep re-affirming that. Or, could be he doesn't know this apparently because his actions appear to indicate this!

You are going to have to cease all inter-actions between dog and baby until he realizes what his boundaries are. Yes, dog standing on baby's chest is a sign of establishing dominance, and you DO NOT want that with any family member, let alone a baby.

You have a lot of work cut out for you with the dog, plus your new baby. If the baby is on the bed, on the sofa, the JR must sit and stay, forget licking any part of the baby. Don't worry the dog may feel left out, he is a member of the family, but has to learn really what his place is and a good firm NO! Will affirm this.

Thanks guys :) well spud knows the baby's scent and not to bite, like the baby was playing with a ball be bought for Spud before we went home, and when we gave the ball to spud he sniffed it and looked at me like "what now?" I had to wash it before he would play with it. So at least he knows that right? As for the rest I'll try it out. Thanks guys. :)

You probably know this but want to say it as so many dogs end up in shelters due to this:
Never ever leave dog and baby alone no matter how good you think the dog is. Apparently even their cries can set them off. I have heard of so many dogs being put down and later people saying "but he was such a good dog I don't understand". Not even for a moment.

Spud is a jack russel. Right now interaction between them is sniffing and licking. He sniffs my babie's hands and takes them in his mouth (very softly). Or he licks the hands, he grabs the feet, i only scold when he comes near the face, but like i said i don't want him feeling like he's being left out.

This concerns me, baby bits and pieces do not belong in his mouth, ever.
No you don't want him to feel left out, spend time with him while baby is napping and reinforce your place as alpha, start with simple commands, sit stay, etc. he must comply, you are the boss.