British Citizenship for non-EEA family member child with PR

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Hi, I have a question regarding British Citizenship application for my children who non-EEA family members holding Pakistani citizenship and UK permanent residence since June 2017. The kids are from my first marriage, were born abroad before 2005. Their mother and I are divorced. She lives abroad and doesn’t hold British, EEA citizenship or settled status. I had remarried and the kids live with me and my wife (their step-mother) who is an EEA national in the UK since 2011. I’m a Pakistani national, both my wife and I have PR since February 2017. Can my kids apply for British citizenship with only one parent settled in the UK or do they automatically qualify based on their settled status? Also, what section of the nationality Act applies to their situation? Any insight would be highly appreciated!