First, check to see whether your company has a policy about not giving references at all. Most large-ish companies in the US (and many smaller ones) have general policies that the only references they'll provide are from HR who will only confirm dates of employment and titles. If your company has such a policy, you can simply inform your friend that you don't want to violate company policy on references.
If that's not an available out, it's far kinder to tell your friend that you can't give a really enthusiastic recommendation is far kinder than silently torpedoing her chances. Since you were just coworkers at the same level, you might try pointing out that a reference from a supervisor is going to carry far more weight with a potential employer than a reference from a coworker. If she insists (presumably because she knows the manager would give a poor reference), this might also give you some cover to decline to answer certain types of questions. Since you weren't a party to every discussion between your coworker and her manager, it's perfectly reasonable to decline to answer certain types of questions in a reference check. For example, if you weren't responsible for setting and monitoring her hours, it's reasonable to personally find it inappropriate for her to come in at a later time but to avoid questions about punctuality because you weren't privy to all the conversations between the employee and management-- it's possible, for example, that her manager didn't care that much if she was regularly coming in a few minutes later than everyone else. You can tell her that you'll diplomatically decline to talk about punctuality, in that case, because that wasn't something that you were responsible for dealing with.
Additionally, references generally only get contacted at the very end of the interview process, it's generally pretty easy to figure out that one of your references is undercutting you when a candidate finds that offers are getting pulled once references get contacted so the silent torpedoing also doesn't spare your friend's feelings for long. Instead, she'll most likely feel even more betrayed when she finds out that you agreed to give her a reference and ended up undercutting her once she had a job or two lined up.
If you were colleagues, it seems unlikely that she would be completely blindsided by your constructive criticism. Surely, if you found something she did (or didn't) do so bad that you can't in good conscience recommend her to a different employer, you would have told her about it when you were working together, right?
