My son did the same thing. You didn't say how old she is. My son is 4 and at this age it is still recognized as something he needs to learn not to do, but should be outgrowing it soon. Have you made sure that there isn't anything wrong down there? Rashes, pain or discomfort of any sort.
Is she old enough to understand that this is not acceptable? Not because touching is wrong, but because others do not want to see it. Forgive me but, maybe she just likes it - in a security blanket sort of way- maybe you could tell her that it is ok that she does it but that it needs to be done in private. Like during bathtime or when she is alone in her room.
Is this a learned behavior? Perhaps she saw another child doing this?
I hate to ask but what of the adults in the classroom? Could anyone be influencing or triggering this behavior? Maybe it's a nervous habit of hers?