The answer to your primary question, is it illegal to collect rent on a property deemed illegal is – it is illegal to permit/allow anyone to occupy a space that is not a habitable space, and has been declared so by Council. To that extent the issue of rent is irrelevant, because if someone is told that property they own is not habitable, then they can’t allow anyone to live there. The consequences of doing so can be very serious.
If you rent a non-habitable space to someone and there is a fire for example, and the person is injured or dies, the landlord can be held criminally liable.
You are in a unenviable situation and I feel for you, but Whale is right, you need to get out now. If the landlord doesn’t get you out the Council may do so.
I am not so sure re the financial side of things, you continued to pay rent after you knew the place was uninhabitable.