Your friend has a problem and needs to admit this to herself before she can get help. Do not lie to Social Services. I have a friend who is a Social Worker and they can tell straight away when they are being lied to on someone's behalf.
I think it is terrible that your friend has put you into such an awful situation. I think you need to see if you can tell your friend that she needs help. I feel so sorry for the kids it must be awful seeing their mum like that.
Parents should be there to look after young children NOT the other way about.
Do not let your friend talk you into lying. You are not doing the poor lassie any favours by doing so.