British Passport application for new born

Hi,

Myself and my wife both are on ILR and have baby recently. She is british by birth as we both parent were on ILR at the time of birth. I havent applied for her British passport yet. We are eligible for naturlaisation application and planning to apply soon.

Is it ok if we parents apply for naturalisation first and once we get our naturalisation done, we all including new born apply for British passport?

Also, My wife's Indian passport is expiring in March 2015. will it be an issue?

That's fine and passport expiry not an issue.