I've only just seen this. Cooper had a grass seed in between his toes last summer, and the swelling looked exactly like in your picture - it took 3 vet visits and one operation to finally get rid of the seed.
After the first visit to the vet he was prescibed rest, antibiotics, salt washes and hibiscrub and the lump did go down.
As soon as he started walking around again though it came back up, so the grass seed was obviously still in there.
Then he had the op (they couldn't find anything but I knew it was still there as he was bothering away at his foot constantly), and again the lump went down while he was resting, then came straight back up again once I could start walking him.
The vet did find it eventually, but do be careful as it hasn't definitely come out - fingers crossed it has though.