Contract and new tenancy?

I've been renting a double room under a 10 month contract. I gave my notice that i wish to vacate the room however it's 2 months before the end of the contract (assured shorthold tenancy). In my contract it states i must find a new tenant for the room, however my landlady is now saying she won't rent my double room, but will rent out the far smaller single room. As this is not my "allocated room" as stated in the contract, is this legal for her to do?

She is also saying i will not receive my deposit until the end of contract term even though i'm not living there any more. She states the new tennant will not even have a deposit. Would that be classed as illegal subletting?

I fail to see how, once the agreed term of your tenancy expires at the end of the 10 months that you have any obligtion to find a new tenant. I could understand it being a term of your tenancy if you wished to leave early and be excused from paying rent for the full 10 months.
Any way even if it was legally binding you can not fulfil it because the accomodation is now no longer the same and changing a double bedroom down to a single is far different so if any body is breaking the contract it is your landlord and, for give the pun, I wouldn't loose any sleep over it.
I'm a bit confused about the 2 months notice as once the 10 months agreed term is up the contract comes to an end and at that stage you could be offered a new tenancy or the present one runs at will and it would be at that stage the tenant normally gives 1 month notice and the landlord 2 months. Until the 10 months is up your landlady can hold you to the contract and pay your deposit back then. She could deduct any unpaid rent.
I don't see why you should be concerned what any new tenant has or does, it's not your problem. Finally, as your Q is on a UK site I'm also a bit confused about the way in which your deposit might be being held. There are new rules now in England & Wales about how a landlady may hold a deposit which basically has to be in an approved insurance type scheme, she can't hold it herself like they used to, this is to try and stop the disputes about deposits not being properly dealt with at the end of a tenancy.
You can get advice from your local councils housing dept. and or Citizens Advice Offices but, from what you've put in your Q I don't think you need to worry as long as you pay the due rent for the 10 agreed months.

Firstly if you rent a 'room' and share communual areas you are not an assured shorthold tenant (no matter what it says on your agreement) because you do not have exlcusive possession. You are a licensee and need only give between a week and a months notice (if that).

Even if you were an assured shorthold tenant the clause you refer to is, in my opinion, unlawful because it is an unfair contract term. Since time in memorial it is landlords who find tenants, not the other way round. To use a colloquialism, as is so often the case in English language, she is leading you up the garden path.

You do not say when you gave the landlord the tenancy deposit but if it was after April 2007 it should have been put in one of the tenancy deposit schemes. Landlords are liable to pay three times the amountof the deposit if they fail to comply with the tenancy deposit regulations.