The maid and her lover also allegedly touched the children's private parts.
The maid admitted to having sex with a man in the house but strongly denied that the children were involved.
Police are investigating the allegations.
Things weren't so contentious two years ago when Madam Annie, in her 40s, hired the Indonesian maid, Ms Fatimah, who is in her 20s.
We are not using the real names to avoid identifying the children.
Madam Annie taught her maid English and encouraged her to read newspapers to improve herself.
She said of the maid: 'She was a smart girl. I saw her potential and advised her to save money to go to university when she finished her contract.'
Madam Annie's two pre-school children got along well with the maid - her daughter even called Ms Fatimah 'kakak' (Malay for elder sister).
But all that changed early last year, when Madam Annie went to Indonesia for a week-long business trip.
During that time, the maid got involved with a foreign worker.
Madam Annie said she and her husband decided to question the maid after her frequent use of a handphone given to her by her boyfriend.
She said Ms Fatimah then admitted that her Bangladeshi boyfriend had visited her home while Madam Annie and her husband were at work.
Ms Fatimah said the man had visited her and had sex with her, while the children were in the house.
Madam Annie said she sent Ms Fatimah back to her agent two days later.
She claimed a check of the maid's luggage before she left turned up some of her and her husband's jewellery and personal items.
Madam Annie lodged a police report last year about the theft. This was confirmed by police.
It was at this point that Ms Fatimah also lodged a complaint of abuse against Madam Annie, who was charged with abuse but acquitted last month.
She later paid the maid eight months of outstanding salary, totalling several thousand dollars.
A month after the maid left, Madam Annie claimed her son said Ms Fatimah showed her breasts to him.
Madam Annie added, tearfully, that her daughter then mimicked the acts of the maid and her boyfriend - kissing on the lips and talking about marriage.
When she probed further, her daughter allegedly told her that Ms Fatimah and her boyfriend had touched her private parts. She claimed that the girl said the maid had molested her brother too.
The little girl added that Ms Fatimah had said her boyfriend would harm her and her brother if she told her mother what had happened.
Lodged police report
Late last year, Madam Annie sent her daughter to a private psychologist for an examination.
In her report, seen by The New Paper, the psychologist said it was unlikely that the child could have made such allegations spontaneously, and added that her claims of molestation by the maid should be taken seriously.
Madam Annie then lodged a police report early this year about the alleged sexual abuse of her children.
She has since moved out of her home and the family now lives at her mother's home.
Madam Annie spoke to The New Paper on 2 Apr, a day after The New Paper published the article on Indonesian maid Susilawati Kusnata, whose employers were jailed for abusing her physically and mentally in 2007.
She had wanted it known that there were also bad maids who had given their employers much grief, and people should be made aware of the plight of employers.
She said she felt guilty about what had happened to her children, and did not want Ms Fatimah to ever work in Singapore again.
'I will never trust another maid or leave my children in the care of strangers again.'
