Nate Dogg's kids are jumping for joy --  all because their stepmom and grandmother called it quits on their highly  contested battle to control the late  rapper's estate ... TMZ has learned. 

According to Sources Nate Dogg didn't  leave a will when he passed, so his wife LaToya  Calvin took charge of his estate  and then filed docs  in August asking Nate's mom, Ruth Homes, be  appointed as her co-administrator.

The move  didn't sit well with Nate's kids, who were royally pissed. They believed the  women were only in it for selfish, money-grubbing reasons and had no intention  of dividing the goods fairly.

According to court docs, LaToya  withdrew her petition for control earlier this month, and her lawyer tells TMZ,  "Nate's children wanted a 'professional administration' and Ruth and LaToya decided to withdraw to avoid conflict with the children."

Sources  close  to Nate's kids tell us they are "ecstatic."