Thank you so much for your response. I actually took Sofie to the vet who was prescribed some cream. The vet was of the same opinion that it was the sawdust.
As I have only had them just over a week I didn't want to risk waiting. The breeder did say that Siamese Mini Lops do have red rimmed eyes but this was more than that and i didn't want to risk her eye.
The Great and Small bedding is similar to - but not - tissue paper, its edible so there is generally very little left come morning.
I asked the vet and have replaced the sawdust on the pen floor with newspaper. I know them is some debate as to whether this is acceptable,but the vet said there was no evidence to suggest that it will harm them.
Saw dust still in the litter tray but will replace it as soon as possible.
They do grrom each other - bought them from the same litter so have sisters. I had also had the same thought.
I did my reaserch before I bought them - but you learn so much more once you have them ;-)
Thank you again for responding :-)