With whom has Dr. Manette been staying since his release from prison in Tale of Two Cities? In what activity does his hostess constantly engage?

Since his release from prison Dr. Manette has been staying with Ernest and Therese Defarge.  His hostess, Madame Defarge, is constantly knitting.

The Defarges own a wine-shop in the Paris suburb of San Antoine.  Ernest Defarge had formerly been a servant of Dr. Manette, and when Dr. Manette was released after eighteen years in prison, Defarge had been asked "to take him, and at (Defarge's) peril, be discreet".  Dr. Manette, whose mind has been affected by his long imprisonment and who has lost touch with reality, is being kept in a locked room above the wine-shop.  It is to this room that Defarge escorts Mr. Lorry and Lucie Manette when they arrive at the wine-shop to retrieve the old doctor.

Therese Defarge, a formidable, woman, is constantly knitting.  She sits "with a watchful eye that seldom seem(s) to look at anything...and great composure of manner".  She knits "with nimble fingers and steady eyebrows", communicating with her husband with gestures in code.  The Defarges are leaders of the coming revolution.  Monsieur Defarge coordinates the activities of a number of clandestine characters, all called "Jacques", and his wife weaves the names of those targeted for death into her knitting (Book the First, Chapter 5).