This is bound to breach yhe terms of the AST if the AST has been drafted on standard terms.
You should inform the tenant she has breached the tenancy by 'subletting'.
The solution would be to mutually surrender the current tenancy, grant a new AST to both (assuming that you check the financial standing if the new tenant and doing the usual credit checks and references) and relodge the deposit with the deposit scheme.
Any questions or queries?
Happy to assist further.
There is a case to answer. The occupation is unauthorised and a breach of the AST. If the tenant refuses to remedy the position you could threaten forfeiture/possession proceedings.
Are you close to the 4 month anniversary when you can serve notice.