Nigerian immigrant Linda Okungowa, 36, claimed almost £50,000 in destitution and child benefits despite working under false identities.
In 2011, she was jailed for eight months after using false documents to obtain work while claiming £70,000 in benefits.
However Judge Simon Lawler QC, sitting at Sheffield Crown Court, South Yorks., chose to suspend her prison sentence after it emerged she had support from local churchgoers who were protecting her from committing further crime.
The judge said the exceptional circumstances of the case meant he wouldn't be sending her straight to prison.
Judge Lawler said: "I may be criticised because fraud from the public purse is common and everybody in this court knows usually the offender goes immediately to custody. But in this particular case I can see no useful purpose to the public in sending you to custody.
"I hope you repay the trust the court has placed in you."
Okungowa, who illegally came to the UK in 2004 on a false passport, believed she would be able to train as a doctor after entering Britain, but instead became entrenched in a mounting debt cycle with the traffickers who helped her get into the country.
She said the traffickers kept increasing the amount they said she owed them and she was left so destitute her children were forced to walk 12 miles a day to school in Sheffield because the family couldn't afford the bus fare.
She also ended up working multiple jobs in a bid to keep up with the repayments.
Neil Coxon, prosecuting, told the court after getting out of prison in 2011, Okungowa took on the identity of a friend in London while applying for work.
After getting several different jobs in the care sector she asked the woman if the wages could be paid into her bank account and later transferred to Okungowa.
Mr Coxon said Okungowa told the woman she couldn't be paid directly due to debts associated with her account.
Between July 2011 and August 2014, Okungowa had claimed £22,610.47 in destitution benefits, and £26,201.56 in child tax credits and working tax credits between June 2011 and January 2015.'
Okungowa, who has three children aged 11, nine and one, said after the case: "I'm not proud of the things I have done but I have been given a chance."
Ben Hudd, the reverend at The Ark church in Sheffield, said: "It was a balance between justice and mercy. We saw an amazing display of mercy.
"Although justice was done with the sentence, the judge had mercy on Linda because of all the things she has dealt with in her life. It was the perfect way forward."
An investigation will now be carried out into Okungowa's finances to see if she can pay any of the money back.