Sofina Nikat, 24, was on Thursday sentenced to a 12-month community corrections order after earlier pleading guilty to infanticide over the April 2016 death of her daughter Sanaya Sahib.
Nikat served 529 days of pre-sentence detention after being charged over Sanaya's death, before she was released on bail in September.
The maximum prison sentence for infanticide in Victoria is five years.
Prosecutors had pushed for a jail term, but her lawyers said a non-custodial community corrections order was appropriate given Nikat's mental state.
Victorian Supreme Court Justice Lex Lasry said he accepted evidence from a psychiatrist that Nikat was depressed when she suffocated Sanaya and threw her body into Darebin Creek.
15-month-old Sanaya Sahib pictured with her mother Sofina Nikat. Source: Facebook
"Since I accept the (psychiatric) conclusions, I will sentence you on that basis," he said.
Nikat was originally charged with murder but this was downgraded because of her depressive disorder.
On April 9, 2016 she told police a barefoot man of African appearance who smelled of alcohol had snatched Sanaya from her pram while they were at a Heidelberg West park.
The Fijian-born woman later admitted she took the infant to the park and played with her before suffocating Sanaya until she stopped moving.
A family who joined the public search found Sanaya's body in Darebin Creek, and Nikat admitted what she did three days after the killing.
"It is a tragedy for you and everyone connected with your family," Justice Lasry said.
"I accept that the way you acted after you had killed Sanaya was consistent with your irrational mental state."
Outside court, Sanaya's paternal family said the sentence was unfair.
"Our justice system has really failed us today. We have not had justice for her death," Zahraa Sahib told reporters.
"We were expecting something, and I don't think it's fair that we've lost a little girl."
