I assume you are in England.
You currently count as 3 and a half persons in a two bedroomed house - that is not overcrowding.
Rooms that are counted include bedrooms, living rooms and kitchens (if large enough). Assuming your kitchen is small, you count your living room and bedrooms - making 3 rooms. If you have two living rooms you have 4 rooms.
A 3 roomed house is for 5 people, so you are nowhere near overcrowding.
In any case, overcrowding is allowed when it is due to natural factors such as children growing up.
It is all explained here:
http://england.shelter.org.uk/get_advice/advic e_topics/repairs_and_bad_conditions/overcrowdi ng
So the housing association is acting legally. You could of course look for an exchange or rent privately.
If that's not possible, your son and the three year old can legally share a room, and your ten your old can share your room.