How long has she been like this? Since you brought her home, or is it a more recent issue? Where did you get her? Were you able to meet her parents and siblings? Are you still in contact with her breeder?
Is there a way you can consult with a behaviorist? Not a trainer, but a behaviorist. I think it would be worth it to work with someone that can guide you. Positive reinforcement for a dog like this, no punishment. I do agree with what Hector has said. I just wanted to add to not flood her with things shes afraid of. When an animal is so afraid that they can't think they are unable to learn and you may gain nothing except a terrified and shut down dog if you try to force her into a situation she's not ready for. Expose her to things, but do so slowly and patiently. It's okay for her to watch from a distance for a while. I'd be wearing a treat bag all the time and treat her for every instance where she's calm and engaging in a way you want to see. If she is unable to take a high value treat then she definitely needs help from a professional sooner rather than later, imo. I don't know how old the children are, but I would teach them to be cautious around her. Fear can make a dog unpredictable.
I have a boy with generalized anxiety, diagnosed by a veterinary behaviorist. He's seven years old now and I spent much too long being resistant to the prescription medications that the behaviorist wanted him to try. He would wake up some days and remain a shaking ball of dog. Medication was the best thing I ever did for him. It allowed him to disengage from his fears enough to actually learn. I had to realize that medication wasn't the "easy way out." Training must continue while using medication. This issue with my dog wasn't a training issue, a lack of leadership, lack of socialization, or anything other than brain chemicals - in his case. He came to me like this and I didn't get him help soon enough. Building trust with my dog was imperative. Once he was able to think, we worked heavily on focus. He learned to look to me. He learned to trust that I would keep him safe. That means that I can't move too quickly to put him in a situation where he's uncomfortable. Baby steps and working at a distance where he's not reactive are key. I can't say this too often - no flooding. My dog is never going to be a normal, happy go lucky dog. We train daily and sometimes he still has his bad days, but I no longer think that his bad days outnumber his good ones. And that's a good thing. This took a lot of work on both our parts and a lot of trust on his. It didn't happen overnight or over months. It happened over years and is ongoing.
*Just to clarify, I'm not saying that your dog needs to be medicated. My dog did. Yours may not. If you consult with a behaviorist and they suggest it at some point, please be open minded. My dog suffered for longer than he should have because I was stubborn.*
