You are right, you can't tell another adult what to do, if its a decision which doesn't affect you and your child. But this is a decision which affects you and ds.
There's two issues. There's the direct impact on you and ds. If he is smoking in the house, you have every right to tell him that you want him to stop. He gets to decide if he smokes or not, he does not get to decide if you and ds suffer from passive smoke. Likewise, he shouldn't be smoking around ds at all in terms of modelling unhealthy behaviour. I realise that DS will probably still realise his DD is smoking though :( but setting some boundaries might help.
The second issue is the effect on the whole family of him smoking. The damage to his own health is a big concern for you and the impact of taking up smoking on your finances isn't insubstantial. What will you all be doing without so that he can burn so much money? Those are the serious issues, but there's also that you might find the smell of smoke unpleasant etc.
I wouldn't immediately go in argumentatively, even though its not unreasonable for you to be angry. Is it possible to talk to him about your concerns and listen to why he has started again? Is he under a lot of strain at the moment? If so, its maybe worth addressing this first so that he doesn't feel he needs a crutch. Or is it just that he daftly tried them again whilst away, has got into the habit and now needs to give up again? Does he want to go back to being a smoker?
Me and DH are both non-smokers, so I don't know the ins and outs of this particular situation and realise it must be different with an ex-smoker, but I'd be furious if my DH took up smoking too. But I also know that I used to have really unhealthy eating habits, and that I sometimes slip back into them which is frustrating, so it must be difficult.