It is not permissible in Islam for a woman to cuddle and sleep with her daughter or son who has already reached puberty. We understand from the following verses that it is not appropriate for adults to sleep in the same room with children.
The Glorified Allah commands:
“Oh you who believe! Let those whom your right hands possess, and the (children) among you who have not come of age ask your permission (before they come to your presence), on three occasions: before dawn prayer; the time when you take off your clothes in the afternoon; and after the Isha’ prayer. These are your three times of undress. Outside those times it is not a sin for you or for them to move about attending to each other. Thus Allah makes clear the signs for you for Allah is all-knowing and judges rightly.”
“But when the children among you come of age, let them (also) ask for permission, as do those senior to them (in age): Thus does Allah make clear His signs to you: for Allah is full of knowledge and rules right.” (An-Noor/ The Light 24: 58-59)
The obligation to knock on the door for a child, who reached puberty, before entering the parents’ room is to avoid seeing them naked. Cuddling and sleeping together is even a further phase. Therefore, the mother you mentioned must quit cuddling and sleeping with her children who reached puberty, immediately.
Comment of psychologist: The situation above is abuse of children. Such cases are prone to incest.