I think that you should contact child services and/or file for custody of the kids. It sounds crazy, but it's completely possible. If you're not responsible enough to take care of your kids and provide a stable and comfortable home and situation for them, then you don't deserve to have them around, in my opinion. Just because she gave birth to them doesn't mean they have to go through all the troubles she gets herself into by being irresponsible. It's not fair to them. Your daughter would probably hate you, but one day she might understand. She needs to learn that in order to have kids, you have to be an adult (or act like one at least). They would probably survive, but why do they have to go through that? Any judge would agree with you that if they can't stay up on their feet (and aren't even trying by getting jobs), that their kids should not be with them. If anything, you might be able to teach her a very hard lesson. You don't know what you've got till it's gone. And you have to take care of it in order to keep it.
I'm not saying take them away and keep them away forever. But maybe they should live with you, still seeing their parents of course, and they can go back when the parents meet the judge's requirements. And in my opinion, your requirements as well. You can't let innocent children live like that.
This is all of course if you even COULD or would WANT to do that. Just an idea, I feel strongly about the idea of children being well taken care of and in a good situation. It's a big deal to me so I probably sound really strongly opinionated right now. Anyway, I like the idea the others had about only buying them things they need for the kids, not giving them money. That would also be smart, but doesn't necessarily solve things.