As one of the poorest residents in the poorest county in Brazil, life has always been a struggle for Maria Eunice Alvis.

The roof of her adobe home leaks during the storm season and vermin pose a constant threat to the health of her 10 children. There is so little money to go around, the family often goes hungry.

For most of her 40 years, survival depended on farinha, the yellowish flour from the manioc root. In wealthy cities like Rio de Janeiro or São Paulo, this is a powdery side dish. But for Alvis and other disadvantaged families in Belágua, Maranhão, it was until recently the only staple that got them through the hard times.

Today, however, the government has thrown them another lifeline – a cash handout known as bolsa familia that is paid on condition children go to school and get vaccinated.

Each month, Alvis receives 250 reais (£65). This sum is not nearly enough to end all her problems but, for the first time in her life, she has a regular income.

"I was so happy when I got the first payment. Now I'm used to it. But it's still good to know that there is money coming in every month," says Alvis, sitting in the small but spotlessly clean two-bedroom home she shares with 11 others.

It has been 10 years since Brazil's former president Luiz Inácio Lula da Silva made bolsa familia a central pillar of the country's social welfare strategy. In the years since, similar poverty relief projects have spread across the globe. The pioneering programme is now arguably Brazil's most successful export, though the pros and cons of such a targeted and conditional approach remain fiercely debated.

On its anniversary this year, supporters celebrate the programme as a cheap and efficient way to improve the lives of the most destitute. Critics say it merely locks the poor into a holding pattern and has little impact on inequality.

Few, however, doubt that by directly giving spending money to the poor, bolsa familia represents a paradigm shift.

At its most basic, bolsa familia is a payment of 70 reais a person to any family living below the poverty line of 140 reais a month.

The programme has grown rapidly. In the past 10 years, the number of recipient families has risen from 3.6 million to 13.8 million, which means bolsa familia now covers about a quarter of Brazil's population of 199 million.

Its importance should not be overstated. Bolsa familia is only one of four pillars in the government's Plano Brasil Sem Miséria (Brazil Without Poverty) strategy, which also includes a minimum wage, formalising employment, and policies to support rural families. There are also pension schemes and housing projects that aim to tackle inequality.

But it is the conditional payment scheme that has grabbed the world's attention because it is innovative, bold and particularly suited to an age of austerity, social networking and platform building.

Social development minister Tereza Campello says bolsa familia was politically harder to introduce because there was a deep-seated resistance to giving people cash handouts.

"Critics quote Confucius and say it is better to teach people how to fish than to give them fish, but bolsa familia recipients aren't poor because they are lazy or don't know how to work, they are poor because they have no opportunities, no education and poor health. How can they compete with those disadvantages? By giving people the money to survive, we are empowering them, including them and giving them the rights of a citizen in a consumer society."

Compared to a fully funded welfare state or social pension system, the outlays are small. Annual disbursements have gone up from 4.2bn reais to 23.95bn reais, but still cost less than 0.5% of GDP. The government says the scheme is also cost effective, with a return of 1.78 reais to the economy for every 1 reais spent.

The headline gain is a fall in extreme poverty for 36 million people. The proportion of Brazilians living in this state (defined as less than 70 reais a month) declined from 8.8% to 3.6% between 2002 and 2012. Strong economic growth during this period and the introduction of the minimum wage were the major reasons, but the government credits bolsa familia for more than a third of the improvement.

"All of those people are in our programme. If it disappeared, they would all fall back into extreme poverty," Campello said.

The numbers are disputed. Lena Lavinas, professor of welfare economics at the Federal University of Rio de Janeiro, says the government overstates the importance of bolsa familia and has exaggerated its achievements by failing to account adequately for inflation in its statistics. If rising prices are properly factored into the calculation, she says, the extreme poverty rate ought to be 90 reais a month, which would mean bolsa familia has lifted only 7 million people above this line.

But while the scale of the gains may be debated, there is no doubt the scheme has eased the pressure on the most deprived communities. That is definitely the sense in Belágua, where the average monthly income of the roughly 7,000 residents is 146.7 reais (£38.2).

"This is a very poor area. About 80% of the people here rely on bolsa familia. Some people still get by on farinha and salt, but things are better than before thanks to bolsa familia," said the head of the local council, Sidrão Soares.

The money doesn't go far, especially for big families, which are common in Belágua. Alvis finds that after buying rice (2.2 reais a kilogramme), black beans (5.4 reais a kg), tapioca (5 reais a kg) and farinha (3.5 reais a kg), she has little left for nappies and toothpaste. The bolsa income usually lasts no more than a week. For the remainder of the month, the family often has just one meal a day, either eating what the chickens lay or using any income Alvis's husband can find on the rare occasions he can labour in the fields or on a construction site.

"There are no jobs here," shrugs Alvis. "The only income in this town is bolsa familia."

Former Brazilian president Luiz Inácio Lula da Silva speaks at an October ceremony marking the 10th anniversary of bolsa familia. Photograph: Ueslei Marcelino/Reuters

This is one the main criticisms of bolsa familia – that it does little to address inequality because it keeps the poor just above a subsistence level, without the means to move up the social ladder. But there is an element of the programme that makes it a long-term investment in the future.

Bolsa familia is used as an enforcement method for public health and education goals. Parents who fail to have their children vaccinated or send them to school are penalised with reduced payments. In Belágua, this is a real threat, according to local teacher Rosimat dos Santos Souza.

"When I started teaching 10 years ago, I'd say that no more than 40% of children went to school, but now it is more than 70%. When kids are truant now, I go to see their parents and I tell them they might lose their bolsa familia. They're really afraid of that, so it works," says Souza.

Nationwide, the government says children are about 10% more likely to go to school if their parents receive bolsa familia, while mothers are 25% more likely to sign up for health checks.

The biggest gains have been in what were traditionally the poorest areas. For the first time in Brazil's history, the graduation rates from schools in the north and north-east are higher than the national average, according to the social development minister.

"Bolsa familia is a platform not just to alleviate poverty, but to get more kids into school and improve public health," Campello said. "The income is an incentive that we can use to solve other social programmes. Once people are in our database, we can offer them other benefits and target programmes at them. In this way, bolsa familia is an instrument for wider programmes. It's a platform."

As an example, she says president Dilma Rousseff is now trying to introduce all-day schools, instead of the half-day that is the norm. This is a vast and expensive programme that is aimed first at the poorest communities, which have the greatest need for extra education and school meals. The bolsa familia database has helped the government to identify such neighbourhoods. Of the first 40,000 students to attend all-day public schools, more than 75% are from families that receive bolsa familia.

There have been other gains since the programme started – albeit on a less impressive scale – in child malnutrition and infant mortality. These have raised the human development index of Maranhão state, which has long had the highest illiteracy rate in Brazil.

While the bolsa familia is unlikely to lift adults out of poverty, the hope is that it will create the health and education conditions for the next generation to think beyond the next meal of farinha.

"There has never been a social programme of this size and significance in Brazil before," said Maria Ozaniro da Silva of the Federal University of Maranhão. "Bolsa familia is bringing the biggest benefits to children. In the future, their lives will be better than that of their mothers or fathers."

• Additional research by Anna Kaiser