Firing a nanny sometimes could be hard, especially when the nanny has been with the kids for long time. Here are a couple of suggestions for firing your nanny, to at least make things a bit easier on both sides.
1) Give warning beforehand. Put her on probation and see if she gets better. If not, decide to fire her.
2) If you want to just fire her, just be polite and tell her straight that she is fired, don't outline her shortcomings. Give her a time frame and then move on.
3) Don't delay or make a big deal out of it. Keep it short, something like this should work out well, "I am so sorry but it's just not working out. Thanks for everything."
4) Don't give any reasons, but do give her some termination pay.
5) If you don't feel like doing it, using these tactics might ease your pain. For example, tell the nanny that "I hate to do this, but it's my husband's idea". Or, just make it an economic issue. These tactics should saves hurt feelings and the save the stress for both parties.