...And just wanted to add this: Since the children's father is also living with you, you need to work out custody arrangements with him. I'm assuming his name is on the children's birth certificates naming him as the father? If so, then he may also want full custody. Have a talk with him about this. Just note---since he and your daughter never married, even though the birth certificates recognize him as the father, he may have to undergo DNA testing. My brother, who was never married to the mother of his kids, had to undergo such testing when he filed for full custody of their kids.
Either way, you and/or the father must take legal steps to make sure that your daughter doesn't have custody (at least until she gets her act together). I know I'm preaching to the choir when I tell you this but it bears repeating---the well-being of the children always comes first.
Best of luck with everything. You are doing right by the children and I know you will continue to do so.