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She held the baby tightly in both arms.
Literal
She [topic-は] baby [object-を] both-arms [in-に] held-tight.
赤ちゃん is a more casual, affectionate word for baby than 赤ん坊 — the ~ちゃん suffix adds warmth. 抱き締めた (だきしめた) is the compound verb 'to hold tightly/embrace.' 両腕 (りょううで) means 'both arms.' The sentence paints the same protective gesture with slightly warmer vocabulary.