In the episode “An Unearthly Child,” Susan claims to have created the name “TARDIS” from the initials of the craft’s proper name, Time and Relative Dimension in Space. There’s been a lot of discussion about whether or not this is true, because the term is used by all of the Time Lords and it’s highly unlikely they would have adopted the term from Susan.
It doesn’t seem to be a problem in my mind, if you consider that we’re speaking English when we call the craft a TARDIS but its real name is Gallifreyan. Susan could have created the acronym from the English translation of the Gallifreyan name (possibly to make it pronounceable for humans), while the Time Lords use a completely different word to refer to it. When a Time Lord says its Gallifreyan name, either through the TARDIS’ translation circuit or through the translation we get by being the audience of the show, we hear the word “TARDIS.” Thus, there’s no contradiction: the Time Lords have their own word for it, and Susan created the acronym.
This is the kind of thing that occurs to you at two in the morning.