When the baby was being born,I was working on my project.
Is this a correct sentence?

Thanks for help
It is a correct sentence, yes, but it would be more usual to say "While" instead of "When". "When" tends to imply a complete action, so you're led to expect something like "When the baby was born ...". Since you put "being born", I'd change "When" to "While".

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Thanks Rommie Emotion: smile
It is better to say it actively

While the mother gave birth to a baby, I was working on my project.
' born ' is a strange word. It is a ' verb ' used in passive without ' by '. Because you can't turn the passive into active as ' born ' is NOT the past participle of ' bear '

Since this is the case, use it actively is more appropriate unless we used the past tense.

eg. The baby was born ........Emotion: smile
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