My mother in-law has lived with us for nearly 2 years. This was supposed to be temp as we are a newly married couple and we want to start a family. She cannot keep a job because she has no skills and she has and attitude towards employers and to us. When my husband told her to move out she said there was an "old Peoples Law" basically saying we cant tell her to leave. Is there a law that protects her?

Where are you generally? I know of NO old peoples law that allows for either bad behavior, or a place to stay other than welfare, or social services.

How old is she by the way? Would you kick YOUR MOTHER out for the same thing your mother in-law is doing? Does your husband share your view of this? Thats why your location is important, because there is a legal law, or a moral/cultural obligation that may be in play here.

No 'old people law.' It's your ethical obligation to assist her in finding a place to go. But since you asked this under Law, you give her 30 days notice in writing to vacate the premises, and follow through with eviction at your local courthouse if she doesn't.

I have a feeling that she isn't a senior so doesn't qualify for benefits and housing. If you are in your 20s and she is only around 50, she's in that nowhere time where it's hard to get a job but is far from retirement. If she has to go to a shelter, so be it. They often have staff who will help.

As noted, any question on law needs to include your general locale as laws vary by area.
This is really a Real Estate Law question. She is your tenant and should be treated the same way as any tenant, Since both you and your husband seem to agree she needs to move out, then you follow local laws to evict her.

But, there is a moral obligation here. Rather than just evict her, find a place for her.

If you were living in China, yes there are some laws.

If you live in the US, no, she is merely lying to you. You evict her like anyone else. Give her written notice, and then if she does not move, take her to court for eviction.