Vivian Kearney, 29, had to be held down by five nurses during the operation and was awake throughout after an epidural meant to take away her pain failed to work.
Afterwards she was unable to form an emotional bond with her children and even asked her mother to take them because she no longer wanted them.
The "terrors and agonies" of the operation had left her with post-traumatic stress disorder, Winchester High Court heard.
Miss Kearney - who gave birth to a boy and a girl - told the court the operation at Poole General Hospital in August 1983 had ruined her life. "I did not like my children. I did not want them and I was terrified I would get pregnant again."
A doctor had told her the operation was necessary because her daughter was dying, and that there had been no time for an anaesthetic.
"Because I had never had a child before I did not know what to expect. There were five people pinning me down," she said.
Mr Andrew Glennie, for Miss Kearney, said she initially did not suspect the operation was responsible for subsequent psychological problems. She thought she was going mad and was treated her for depression.
However, she later read about a woman with similar problems and the connection "came to her like a bolt from the blue".
Miss Kearney, of Wareham, Dorset, won leave to pursue a personal injuries claim against East Dorset Health Authority.