I have been thinking of this a lot and based on everyone's post here, This is what I have done.

So far, my girlfriend has been telling me about her mental state and what she is going through. This time, I told her what I am going through and the dilemma that I am under. I told her how its affecting my family life and how guilty I am about what I am doing to my wife and daughter. After hearing me out, she said that she is willing to do anything that I want her to do.

I did not have the heart to tell her that I am planning to break up with her but I told her that we both need to think about our relationship and where we go from here. Told her that we need to slow down and give this some serious thought.

She listened to me very calmly and said that she will think about it and let me know what needs to be done. She also reminded me that what ever we do or decide will never ruin my marriage. She said she needs time and will give her reply by this weekend.

So I am waiting for her reply and I really don't know if I could have handled this better. According to me, this is the best that I could do. I hope she takes it well and understands. Lets hope for the best.