It's actually bad for business to have widely different levels in the same classroom. Your principal should understand that learning cannot effectively take place in such conditions and that children will get frustrated and become disruptive.

I suggest you insist it's unprofessional of him/her to expect you to work like that and that the pupils be streamed according to level. Language learning is not like teaching Maths where you can manage with pupils with different levels of ability. One thing is to have mixed ability within the same level, and another to have elementary students in the same class as upper-intermediate ones.

In the meantime, you could try putting them in two groups and giving them different tasks and projects. Keep teacher-fronted interaction to a minimum and monitor and facilitate, rather than "teach" the whole class. Any grammar or vocab can be fed in as they prepare and perform their tasks. Are you familiar with task-based learning? Jane Willis' book 'A Framework for Task-Based Learning' is very readable.

Useful language can be presented in the material and students are encouraged to use it. You could do reading, writing and speaking activities like this and language input can be done ad hoc. Listening activities may be more difficult to do, unless you have access to a different classroom. It does involve "double-prepping" but seems like there's little choice.

Hope this helps!