Talk to your dh again about it. Tell him how you feel about her. If he hasn't noticed your reluctance to leave the kids alone with her make sure he knows about it now. Point out that, though she came to help, she is not doing so - in fact, she is doing precisely the opposite. Ask him if he really thinks a prolonged absence from Australia (?) is the best way she has of dealing with being unemployed.
What is she living on while she's with you? Will she return to Oz when the 18m are up? Why 18m? It seems an incredibly long time to freeload off relatives, which seems to be what she is doing (I am probably making huge assumptions here). Is this part of the 2 year travel thing they get, in which case suggest she does some bloody travelling.
How old is she? Does she have problems you haven't mentioned (learning difficulties, for instance)? Would she be able to work while she's here so that she could keep herself and live elsewhere? Is she entitled to benefits while she's here?
I think you should also talk to her, though I realise this will be difficult. However, if only to set your mind at rest, as it were, I think you need to find out what she thought she was doing. I think she should also be made to understand the effect her actions have had, that you can't trust her. At the least, she should understand that if she wants you to trust her, she will have to work to earn that trust back.
It is a horrible thing to be living with. My mum once bruised dd's thigh when changing her. The mark was so faint you could barely see it, and I knew beyond a shadow of doubt that mum would never have hurt dd on purpose, that it was the result of trying to keep her legs under control while getting the nappy done. Even so, it took me a while before I stopped worrying about it.
This is eating into you. You won't be able to feel easy about it until the situation is resolved, so you need to take some action, no matter how hard it is to broach. Work out what you want to say, what you want to happen, stick your chin up, take a few deep breaths, and start talking.