I hate to hear things like this. The problem is that when people need help they often start to feel entitled to it, which is to say that they are feeling sorry for themselves. I'd like to say sit her down and talk to her, tell her that you cannot be responsible for your own family and also hers. This is of course the first step. I have a feeling however that being nice about this isn't going to get you anywhere. I would not tell her help out or get out, but I would tell her that you would have to put her out of the house within say a 6o day period if she didn't contribute more to the house. The object is to make HER responsible for putting her kids out on the street or in a good home, and not you. I know this sounds harsh, but you have to take care of yourself and your family first and foremost. It is truly wonderful of you to have helped her, but you are not a bottomless pit of support, energy, or money. Talk to her about how you feel, and if that doesn't work tough love is in order. I'm not saying just tell her to get out, I'm saying tell her what she has to do in order to stay and give her a time limit for improvement, then if she doesn't make that deadline kick her out. I know it sounds horrible putting her and her children out, but she is the one that holds responsibility for them. If you give her time and she doesn't improve then force her to. If it really scares you then go to the local human services dept and get all the info on housing, food stamps, and medicaid so that you know the kids will remain healthy and taken care of.
I hope this is helpful, but like all advice take what you want from it and discard the rest.