EEA Family Permit Extension BUT Sponsor on ESA

Hi!
Just wondering if I could get any help from you guys on my current situation...

I am from Crimea but still holding Ukrainian passport.My spouse from Lithuania.We have two daughters aged 8 and 9 both born here in UK.

My story

I came to UK in 2003 as student to work on farm with 6 month visa and overstayed when visa expired so I stayed illigaly during which time I met my spouse.In 2007 we decided that it is being enough to live a life like that and hide from UKBA for myself as we already had 1 year old daughter and we were expecting 2nd child.
I did voluntary departure to Crimea and then applied for visa in Lithuania where we actually got married in 2007 later on with my spouse.After that i went back to Crimea and applied for eea family member visa which I was granted for 6 month only.
So I came in March of 2008 into this country.I was working through agiencies as well as my spouse during that time.
So since 2008 I am living continiously in UK and my spouse from 2003.
In 2010 I was granted 5 year EEA family permit which allows me to work and study in UK.It is expiring 2nd of September this year.
Our problem is that my wife had a neck injury at work back in February 2012 and since then she is not working.
I am not working currently myself as looking after her and children.
The thing is that she was refused disability and at moment she is on ESA as well as housing and council tax benefits.
Our concern is that we went to a solicitor(150 GBP for 1 hour advice) who told us that she is not exercising treaty rights and I will be refused to stay in this country with my family but less likely that I am going to be deported.
Do not know what to do in this case as she is still unable to work due to health problems.
Please advise on what to do?

Thank you in advance to you all who took time reading this!

It is a shame you wasted your money ,as the advice given by the solicitor was totally wrong.

Under Regulation 6, a person temporarily unable to work due to accident or illness is a worker.

Thanks Obie!
So in our case we just apply for my residence permit and move on?
Which form exactly should we use to apply for my residence permit extension?
Thank you in advance Obie your help is much appreciated!

Obie wrote:It is a shame you wasted your money ,as the advice given by the solicitor was totally wrong.

Under Regulation 6, a person temporarily unable to work due to accident or illness is a worker.

Also what about government want us not to be dependant on public funds(benefits)?
Tia

Are you working?

How long had your wife been working before you left Ukraine.

Obie wrote:Are you working?

How long had your wife been working before you left Ukraine.

I am not currently working as looking after her.
My wife being working from 2004 to 2012 continuously until when accident happened in February of 2012.

Thanks!

Have you evidence of her employment over this period.

It is a bit complex but you should be able to secure PR.

Yes we do have evidence of her employment starting back to 2004.
So do I need to apply for PR and not for another EEA family permit?
P.S. We are prepared for the worse anyway but going to appeal in case of refusal just not sure where appeal will lead us as last couple of years it seems like Home Office violating european laws along with human rights refusing people to stay in UK with their families.

The is a violation of EU law and individuals human right but one just have to fight to ensure their right us nit violated.

Totally agree!Who never fights never wins...

Just one last question Obie - sorry to bother you btw.

What application should I make in my case I mean which form to complete and send as there is couple different ones on their website?
TIA

Obie wrote:The is a violation of EU law and individuals human right but one just have to fight to ensure their right us nit violated.

What application should I make in my case I mean which form to complete and send as there is couple different ones on their website?
TIA