All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
That act, besides being a sin, is very heinous and just like the acts of animals which one usually feels ashamed of. The Messenger of Allaah, sallallaahu ‘alayhi wa sallam, said: "If you feel no shame, then you can do whatever you wish." [Al-Bukhari and Muslim]
It is incumbent upon you both to repent sincerely to Allaah The Almighty and not do that awful act again. For more benefit, please refer to Fataawa 86527, 85286, and 92083.
Whenever your wife calls you for doing that heinous act, rebuke her and explain to her that what you did before was wrong and forbidden.
However, such practices have no effect on the validity of the marriage; rather, the bond of marriage still remains. If you fear for your children from her in case you divorce her, then you can keep her and not divorce her. Also, you can marry another good Muslim woman. In this case, you should know that you have to be fair with them so long as they both are your wives.
If we presume that divorce takes place, then seek every possible means to prevent your wife from taking custody of the children. If she marries another man after you and then does the same awful act in the future, then there will be no blame on you, Allaah Willing.
To answer your statement "I do believe that she stopped practicing as a result of me as I never encouraged her enough", we can say that the chance is still available so long as she is still your wife to make up for your negligence towards her and to strive to protect her from Hellfire as Allaah The Almighty says (what means): {O you who have believed, protect yourselves and your families from a Fire whose fuel is people and stones, over which are [appointed] angels, harsh and severe; they do not disobey Allaah in what He commands them but do what they are commanded.}[Quran 66:6]
The prominent scholar Ash-Shinqeeti said in Adhwaa' Al-Bayaan: "It is obligatory upon one to enjoin his family members such as his wife, children and the like to do what is good and forbid them from doing what is evil for Allaah The Almighty says (what means): {O you who have believed, protect yourselves and your families from a Fire.}"
Thus, you have to strive hard to advise your wife, enjoin her with what is good, forbid her from what is evil, and encourage her to adhere to the religion of Allaah The Almighty. May Allaah guide you to what you like and pleases you.
Allaah Knows best.