I'm in two minds...I'm a dog lover, and have always been brought up with dogs, and even when I was a tiny child, I really loved our pets and definitely think it's a valuable experience for children to be around animals.
That being said, I have also been bitten by one of our dogs, (mostly my fault, I bent down to give him a kiss, my long hair covered it's face and I think it scared him, and he bit my nose) but it really really really hurt, I had to go to hospital and have stitches, because he was a miniture jack Russell, damage was tiny compared to what could have happened if the Labrador bit my nose!!
I think when you have a house full of children, no matter how lovely they are, and no matter how lovely the dog is, it's not fair on the animal to be surrounded by so much noise and bother...what if a child scares the dog like I did??
Ofsted would want to see that your dog is securely locked up for the hours that you are open for business, is that fair? I wouldn't do that to my dogs. Coincidently, I don't have dogs now, I have cats, and they spend most the day in hiding- I feel guilty enough about that!
It seems mightily unfair because you have a dog, you may not be able to run childminding business...but that's one of the hurdles you have to cross in order to work from home.
Good luck- let us know what happens! Would be interesting to see how inspectors view this!