JON & KATE SPLIT UP KIDS

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Jon and Kate Gosselin’s bitter divorce is not only turning into a huge battle over money, it will also split their eight children into two families, The ENQUIRER has learned.

"Jon and Kate both realize the nastiness between them was creating an unhealthy atmosphere for the kids, so they’ll split them up," a source close to the stars of Jon & Kate Plus 8 believes.

"Jon will take the twin girls Mady and Cara, while Kate will get the sextuplets. While Kate won’t be happy with the situation, this is the lesser of evils."

Right now Jon, 32, and Kate, 34, take turns looking after the children at their $1.3 million home in Wernersville, Pa.

If the new arrangement takes hold, the 8-year-old twins will live with Jon in New York, while Kate moves permanently into their Pennsylvania home to care for the 5-year-old sextuplets, an insider close to Jon told The ENQUIRER.

"Jon badly wants to spend more time in New York to work on his relationship with Hailey Glassman. He also thinks it will be easier for him to make business deals if he’s in the city," divulged the insider.

"Kate just wants to be as far from Jon as possible. She doesn’t want to share the house and she’s tired of having to leave when Jon’s there."

The Gosselins’ divorce and custody deal is expected to be final within weeks, but they’re still battling over their estimated $10 million fortune, sources say.

For  the full story and ALL the details of the Gosselin nasty divorce battle pick up the new ENQUIRER!