What an awkward space! The door opens into the room where the hearth juts out, making it even narrower. In an ideal world I would want to make the fireplace smaller (a flat hole in the wall with no hearth) and change the door to open outwards. However I'm guessing they may not be options! You need the room to work in 2 ways, one as a cosy space for the adults in the evening and the other as a larger clear space for the kids during the day, a tough call! I would consider dividing the room into 2 defined areas, one for kids and one for adults. The adult space should be at the window end and mean moving the TV to the other side of the fireplace. The sofa could go under the end window and 2 chairs either side. This will be a tight fit, would you consider buying a new L shaped one in a more compact design? This could sit by the radiator with a chair opposite. A rug and coffee table would further define this space and make it feel cosy. At the other end, you could place your toy storage behind the door, (maybe invest in some more!) and then bean bags could give the kids some seating for watching TV and playing games. The TV being freestanding could swivel according to day/night position. I hope that gives you some ideas, I'll try to find some photos to illustrate what I mean! Good Luck!

Just a quick note to thank you all for sharing your thought, ideas, experience and time. I especially want to thank Bluenan and decoenthusiaste for being with me through the all process for the last 6 months or so..., just wanted to post few photos of the results (https://www.houzz.com/discussions/any-ideas-for-final-touches-to-this-living-dinning-room-dsvw-vd~569586) as I feel it is not only me who created this space but it is your creations as much as mine. It may not be perfect or according to the the "Rules", but it is Me and my family. Each and every piece was chosen by me in different parts of the world and each one of them has a unique story behind. I am very pleased with my space. I love it! I am very blessed. .... and so I am off to my new project now... Back to school.... that's really going to be hard ;) Thank you all, once again.

fragle0 ... congratulations on the new addition to your family. Have been following your lovely changes. You probably won't have time to work on the decor for a while. Just wanted to suggest that you try pulling the nesting tables forward to be more in line with front of the chairs & placing your floor lamp to the back of them. This will give a bit more light at night for reading in that area.Also switching the plant by the fireplace & the one on the corner by the sofa.

Adding width BEHIND THE BED - with a headboard (which doesn't have to be a "headboard"; it could be fabric, collection of mirrors, collection of pictures, a farm gate!, small chairs or stools) across the entire width. Matching bedside tables/bookcases/chests/ with LAMPS - useful storage for extra books, extra bedding, etc. CURTAINS always warm up a room. People will always feel colder away from home - provide an extra blanket or duvet to add to the bed. I notice there is no WARDROBE. Not really necessary for overnight guests (provide hooks on the back of the door) but useful for storing your out-of-season coats, etc. There is plenty of room behind the door. Buy one on eBay and paint it to suit your colour scheme.