Well, its taken us about three months, but the living room is finally in a presentable state, that we wouldn't be ashamed to show people. There has been an amazing transformation taking place.
Behind the layers of shiny paint there was paper. We didn't discover this until we started painting, and the wet paint started to peel off as it was being painter with a roller. Firstly we thought it was just paint, but after peeling this off, and trying again, we found that the second layer also came off. We then discovered that the wall had been papered with lining paper. The first coat of paint brought the surface of the paper off, and the second layer of paint brought the backing paper off. We had undercoated the walls with cheap magnolia so we didn't waste too much money. Behind some of the paper the plaster just fell off, and we had to scrape it back until we had a good enough surface to re-plaster. We sanded the walls and repainted, then put on two top coats of Crown Liquer.
This is how it looks now:
We're really pleased with the result. There are still a few things we need to do, and we still have some building work to do in the future, but for now, we have a lovely warm and cosy room to enjoy and receive visitors in.