Options for older dog, danger to kids

We have tried everything to help our 9 yr old shepherd (?) mix get along better with our two kids (5 yrs and 2 yrs). He's a street dog rescue we've had since he was 3 mos old. Before our oldest was born, we knew he was skittish around children, so we met with an animal behaviorist reccomended by our vet. We started extensive behavior therapy and anti-anxiety meds. He also gets lots of exercise and walks to work with me or my husband most days.

Anyhow, he never totally warmed up to our kids (despite the fact that our children have been "trained" in dog manners as well and behave perfectly around him). This is also despite continued meds & therapy.

Now that he's older, he's become increasingly annoyed by them. He's never bitten or snapped, but he has fear-aggression, and I'm worried for their safety. He cannot live with us anymore. It devestates me to say that.

I don't want to put him down, I'm considering the following option:

He could "move into" my husbands office. He's there during the day most of the time anyhow. It's a great place with lots of activity and a big yard and he even has a dog door there.
We would pick him up at night after the kids are asleep and he would spend the night with us in our bedroom, with a dog gate up. Repeat in the morning. Does this sound insane?

On weekends he'll be by himself a lot though. Is this really a good option? Should we rehome him instead?

Who are you going to rehome a child aggressive dog to, seriously?
Even in an adult only home unless he never goes for walk he's still likely to encounter kids, they're everywhere.
I don't think the office is a good idea either especially at weekends. Can't you give him a room at home, even a large crate would be better than almost total separation for an already anxious dog.
I don't understand why he can't live with you anymore tbh has he recently attacked your children because if so you failed to mention it. No he's never bitten or snapped but has fear aggression, so what form does this fear aggression take? Is he just growling? A large covered crate where he can relax away from the kids would be my choice, at least he'd be on the premises and could still interact with you and your husband while the kids were safely in another room.

About rehoming: there are several senior-dog foster programs in our area. So that is an option.

About kids: It's actually easy to keep him away from kids on walk, etc. It's not like he charges at them. He just shouldn't be sharing living space with them.

"Dog Room" in our house: I guess this is a better option than him being in the office during weekend days. I'm not sure this is even fair to our dog.

I'm leaning toward re-homing. ugh, I don't know. I'm so sad about this, but I know it's the right thing to do.

Yeah great idea rehome a dog that's aggressive to kids, it's the aggression that's the issue not his age, not that you've elaborated how this aggression is shown. Pass the problem on as long as he's no longer your problem. Poor dog.

The aggression is shown by growling about 75% of the time when the kids pet him (the kids only pet him under strict supervision and have never grabbed or pulled at his ears, fur, etc.) This has continued despite extensive positive-reinforcement training and meds. We hoped for improvements, as the kids got older, an just resigned to saying "you can't pet the dog for now because he is scared".

This situation seemed sustainable. The dog has lots of personal space and the kids respect that. Also, the dog seems fond of the kids in general (greets them fondly, is protective of them, wants to sleep in their rooms when there is a thunderstorm).

Also, his growls did not seem that threatening. his growls were "open mouth" growls that we're kind of a yelp, accompanied by backing away from the child. We figured if the kids kept their distance, the dog would eventually warm up to them.

However, this changed the other day when my 2 year old touched him and he made a "closed mouth" growl and did not back away. This freaks me out. I'm not going to wait until something worse happens.

Also, my kids may have excellent dog-manners, and proper supervision, but I can't control every single situation.

Wow, what a difficult situation.

You have to put your youngsters first, I can see that. What are your behaviourist's thoughts on the situation?

Sorry there is only one solution before something bad happens. Sad as it is but I have had to help so many owners in this predicament. So sorry.

Sorry to read of your problem.
Rather than putting him to a rescue or rehoming, why not look at a sanctuary. A sanctuary should be a place where the dog is kept for the rest of its like and if a proper sanctuary will be aware of his issues and control the situation.
We have taken in quite a few dogs who have shown aggression to children, we have no kids ourselves and the dogs all live in the house but have a big paddock they go to for exercise numerous times through the day. With the potentially aggressive ones, if outwith these areas, they are muzzled.

Could he have an kennel/run combination for the daytime, and come indoors in the evening to spend some time with you, after the children have gone to bed. A snug bed, a radio, and lots of chewy things will be needed while he adapts to the transition, but I think I would prefer that to all but the best of pet rescues.

Thank you everyone for the advice and support.

Right now he is in a "dog room" (our bedroom) with chew/treat toys and his bed. There's a gate in the doorway. It's where he sleeps anyhow, so it's a nice comfortable place for him, and he can still observe the activity in the house. He still has lots of contact with us.

He also gets to go out in the yard. We have a nice fenced-in yard with a covered porch. I let him hang out there till he wants to come in. But I need to escort him back to the dog room.

I'm not sure if this arrangement is fair to him. He seems very confused. The kids are confused too.

However, we only need to do this on Sat & Sun. On weekdays he spends basically 90% of the time with my husband at work.

I'm need to ask our vet for advice.