Document! Document! Document! The best thing you can do is keep a journal and document EVERYTHING. No matter how small it seems. This way when you go to court you can say this is what happened and when. This is HUGELY powerful. Even if it doesn't get that far it will help as your children get older and want to know what the hell really happened. (And they will, and they will HATE their mother for it.)
From what I've been seeing in my own struggles is that unlike the US, the UK seems to have had enough with parental alienation syndrome (PAS) and hostile aggressive parenting (HAP). There's lots of examples of mothers losing children in the UK for these types of things. Look up those and find a support group in your area. It will save you a lot of sanity and help get you through it. If there's none then there's a large FB & G+ community too.
It's a damn shame that more people can't see that co-parenting is really what is in the best interest of the kids. It seems like you're trying to do that but she's just taken advantage of the situation. That being said, you're going to need a lawyer if you can't afford one, then good luck. However if she's really as unstable as you're saying e.g. moving in and getting pregnant after two weeks of knowing a guy. Then you might be able to push for psyc eval and have some more leverage. :(
You really can't be a parent with that limited amount of time with them. Since your daughter doesn't really know why she doesn't and it just was a sudden change that's a HUGE red flag for PAS. Check out Ryan Thomas and you'll have a better idea of this too. Just be honest (to a point) and be supportive. You need to insist that even though she doesn't want to stay over that she stay over. Be a parent and be involved in EVERYTHING. Find out what's going on at school. Make yourself known in all aspects of her life. Let everyone see that all your actions are for your children and making sure they're taken care of. You've got a long hard fight ahead of you but it's going to be worth it. Her mother can spew all the vitriol and lies she wants, but when people look at what is being said and what you're DOING then they'll know. This is why documenting everything so important too because it's going to get A LOT worse before it get's better.
If you want to PM me I'll be happy to talk to you more, there's a lot I can't' go into on a public forum because I'm still going though the courts my self. Good luck.