@John466
I have read numerous times that hosts offering more than one bedroom in a home are encouraged by Airbnb personnel to list it as entire place. That said, they must explain the situation clearly in the listing.
What you describe is a host going back on the conditions that you rented it from them if it was not clear in advance that host would be present.
I agree that calling Airbnb is the way to go in this case. In case your exchange with the host was off the booking message page, then a tip for the future: keep conversations on that medium because it creates a record of proof that Airbnb has insight into in case of disputes. Even if an exchange was by sms or verbal it's always good to reiterate it on the Airbnb message thread.
Hope you find a good solution.