Really don't think this is a problem I've always been known as Grandma X and so has my counterpart. Never bothered either of us.
If it's such a problem for you I would just call her Nanny X and maybe this will make her have a rethink about how she refers to you. I would definitely not correct the children, it's not fair to confuse them or involve them in this ill will.
Does there need to be a new by-election rule?
Favourite small treat when feeling blue or conversely a bit flush



