If your wife (the EEA national) is the mother of the child and held permanent residence at the time of the child's birth, the child is a British citizen by birth and you can apply directly for a UK passport for your child.
However, if your wife only acquired permanent residence after the child was born, the child will need to be registered as a British citizen (using form MN1) before you can apply for a UK passport for the child.
Have a look here for more details (scroll down to children section):
http://www.immigrationboards.com/britis ... 95747.html
All information given is just my opinion as a member of this forum and does not constitute immigration advice.