Example MY transfer function block contains (-kps-ki)/s. Here i need to update the value of kp and ki based on the input(U) to this block. (or) if U < x (some value) need to set kp=0;ki=y else need to set kp=z;ki=0;
The most straightforward method is likely option (3). You can construct the transfer function models via fundamental Simulink blocks with your 'Kp' and 'Ki' values as inputs. You can changes these values according to the necessary logic that you describe above.