Given two disjoint sets $W_1$ and $W_2$ of points in the plane, the Optimal Discretization problem asks for the minimum size of a family of horizontal and vertical lines that separate $W_1$ from $W_2$, that is, in every region into which the lines partition the plane there are either only points of $W_1$, or only points of $W_2$, or the region is empty. Equivalently, Optimal Discretization can be phrased as a task of discretizing continuous variables: we would like to discretize the range of $x$-coordinates and the range of $y$-coordinates into as few segments as possible, maintaining that no pair of points from $W_1 \times W_2$ are projected onto the same pair of segments under this discretization. We provide a fixed-parameter algorithm for the problem, parameterized by the number of lines in the solution. Our algorithm works in time $2^{O(k^2 \log k)} n^{O(1)}$, where $k$ is the bound on the number of lines to find and $n$ is the number of points in the input. Our result answers in positive a question of Bonnet, Giannopolous, and Lampis [IPEC 2017] and of Froese (PhD thesis, 2018) and is in contrast with the known intractability of two closely related generalizations: the Rectangle Stabbing problem and the generalization in which the selected lines are not required to be axis-parallel.