Wife blackmailing but not divorcing

I am married from 12 years and have a girl aged 11 year and son of 7 year. she came to know of my extramarital meeting with somebody and got hold of some chats. She started blackmailing and now has reached peak with cruelty. we are living separate from last one year due to my job constraints. she is staying in my parent's place which is owned by them. she ill treat them. my mother is suffering from cancer and is losing health to her tantrums. my parents are aged 67 and 62. she extract money from me and then only she allows me to talk to my kids. she keep her phone switched off or blocks me. she calls when she need me and then blocks for sometime up to a month. we had many meeting involving my and her parents but nothing has changed her behaviour. her parents accept her fault but are "no" for any divorce. presently she has stopped communicating with her parents also as they counsel her. we hired a marriage counsellor and she made false stories there to blame me. later on when she was counter questioned by counsellor then she refused to meet counsellor again ever. Each meeting worsened her as she realised that nothing much happens. she has not let me have conjugal relationship with her from past 6 months despite we meeting twice for weeks. she threatens all of us with 498a and her right to everything. i have not intention of marrying anybody else. i want to raise my kids in better and healthy environment. i am ready to take responsibility of my kids for whole life. she is Phd and has worked as Asst Professor. but presently she has left job. please suggest me how to get my kids, parents and self out of this mess.