Ms Matthews told police she had no idea where her daughter was
Missing nine-year-old Shannon Matthews had been given the sedative drug temazepam for up to 20 months before her disappearance, a court heard.
Leeds Crown Court heard drug traces in her hair indicated prolonged use.
Shannon's mother, Karen Matthews, 33, of Dewsbury Moor, West Yorkshire, and Michael Donovan, 40, deny her kidnap and false imprisonment.
Ms Matthews asked Mr Donovan to look after Shannon while she left her partner, witnesses told the court.
A detective and two friends heard the admission, the court was told.
Det Con Christine Freeman then told Ms Matthews she would be arrested.
The court heard that Ms Matthews had told a different story when interviewed by police after Shannon was found, but before she was arrested.
She said Mr Donovan took her daughter because she turned down an offer he made to let her and her children stay with him last December.
She said the offer came after she had been arguing with her partner Craig Meehan.
Ms Matthews told officers: "That's the reason he's done this. I could have protected her from him.
"I never thought he [Mr Donovan] was like that. What he's done had shocked us all."
In the interviews Ms Matthews was asked directly if she knew where her daughter was all along.
She said: "I swear on my life I did not."
'Floods of tears'
Det Con Freeman, a police family liaison officer, said Ms Matthews made her admission three weeks later when two friends asked her whether she had arranged for Mr Donovan to take Shannon while she left Mr Meehan.
The officer told the court: "Karen took the biggest intake of breath that I've ever heard in my life and said, 'Yes, that's right'.
"She said that she'd planned to leave Craig and she'd asked for Mike to take Shannon and she'd packed her bag intending to leave but then she'd ended up having to report Shannon missing to cover her back."
Ms Matthews's friends Natalie Brown and Julie Bushby were asked about the conversation.
Shannon Matthews disappeared for 24 days in February
Mrs Brown said: "She was in floods of tears, shaking, really scared."
She said Ms Matthews told them: "People will hate me for what I've done and I've disgraced the kids."
Mrs Bushby told the jury: "She said she's packed her bags ready to leave him and couldn't go through with it.
"She was crying, sobbing really. She was blaming everybody else but herself."
A forensic toxicologist told the court that tests showed Shannon had been ingesting the drug temazepam and travel sickness medication for a prolonged period.
Dr Craig Chatterton said it was not usual for children to be given temazepam, as it was a powerful sleep inducer.
On Tuesday the trial heard that nine-year-old Shannon was found hidden under a bed by police at Mr Donovan's flat in Batley Carr, Dewsbury, West Yorkshire.
Ms Matthews and Mr Donovan also deny perverting the course of justice.
The trial continues.