OP, the more I think about it, the more I don't see how there's a way forward. You still don't have the truth. He didn't come clean. It seems as if everything was more ongoing and serious than he's admitting, for her to think she still has a place somewhere in this. He must have really sweet-talked her.
She's young and hot, like we all are at 20, and he went for it. This really doesn't bode well for your future years together.
Said future will probably be as people here say who have trodden this path before - full of resentment and worry about what he's doing and not experiencing much peace.
And if you stay together, you're taking the huge risk of wasting many years of your life and having your mental and emotional well-being extremely damaged, because what if he does it again? It's quite possible that every year you give him from now on will turn out to be a year wasted, and you can never again know if you are wasting your time, unless the other shoe drops. You'll never be able to relax. It sounds like a really depressing way to live. You are too good to live that way.
Cut yourself free from this terrible situation, darling. Spread your wings and soar above it. Yes it's scary, and it's not what you ever wanted, but staying with him, that way madness lies. You can make a GOOD life for yourself with your daughter. A life where you're not cast in the distrustful, suspicious wife role. A life of integrity where you are only intimate with men you trust. To stay with him would be to accept a sad, empty, half-life, in my opinion, when you could be living authentically, with trust and respect and non-tainted love in your life. I know some people work through it, but God knows how. But he's young to be doing this, and the lack of thought about his daughter is indicative of someone who might repeat this behaviour. Because if he doesn't even care about putting her world at risk and potentially only seeing her half the time, what hope is there for him to behave for the rest of his life? Is that even realistic, given all the above?
Let her have him. She'll soon know the meaning of the saying "Be careful what you wish for."