Have only read your posts OP, but I'm pretty sure I'll just be repeating what others have already told you.
FUCK ME, HE SAW YOU COMING, DIDN'T HE??
Separated from his wife and won't divorce (waiting for her to want to divorce, my arse!), £thousands in debt, three small children. Finds a younger, solvent woman who provides a roof over his head and for his children.
And then there's this -
"He is very sure of himself and pushes back strongly when I try to raise an issue, and he can be very defensive on certain topics - his parenting and his financial situation in particular."
Yes I bet he does push back strongly and is very defensive! He can't let you slip away, you're his mealticket! Can't have you questioning him!
"I think he wants a blended family with me taking on more of a step mum role. I feel they have an amazing mum already and him, they do not need a third parent and I am just a nice, safe adult they know well. He resents my attitude on this."
Yup, he wants you to step up to being a stepmum because he then gets to step down. He's not looking for a third parent, he's happy with two and he'd prefer those two to be mum and you. Of course he resents you dodging that bullet, because then he's required to do the parenting himself (which you think he does quite badly, no?). After all, he's outsourced the adulting to you, why not the parenting too?
"I love him a lot but I am starting to feel trapped and unhappy and worried that this is just how my life is going to be forever now. DP is great, thoughtful, supportive and absolutely adores me."
You feel trapped because he's doing his damnedest to trap you. You are a catch, and he wants you to stay caught.And how can he possibly be "great, thoughtful, supportive" when his default behaviour when you raise issues is to push back strongly and try to make you feel unreasonable?
I just don't know what I owe his children - their friends are on this street, their bedrooms are here. They love me, they love our life here and they are settled and very happy.""
You don't owe him or his kids anything. They live with their mum, they have friends there, they have bedrooms there. 'There' is their main home with their main (resident) parent. Your home is where they come every other weekend, and it is their dad's responsibility to provide somewhere, not yours. That you think it is down to you demonstrates that he really has done a number on you, OP. You call it pushing back, I think I'll call it manipulation
.
Please, please, step away from this parasite. Ask - tell! - him to move out. You're not making him homeless, he just has to go back to the work-provided accommodation. And give you some space from him and the life he is determined you should adopt.