Start small
Adults should always guide interactions so both children and dogs have room to be comfortable.
There is no need to rush. A predictable, manageable step is usually more useful than trying to solve the whole situation in one day.
Try this next
Create separate rest areas, teach children to leave dogs alone when eating or sleeping, and supervise closely.
Notice what helps your dog stay comfortable and engaged, then repeat that version before making the situation harder.
Keep it kind and practical
Keep the next step easy enough that your dog can succeed. If you are worried about safety or feel stuck, pause and ask a qualified reward-based professional for help.