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It’s tough when you and your Mother-In-Law and have differences on certain things. You cannot challenge her as it may affect your marriage life. What you can do is step back, detach and practice “healthy selfishness.”One must take “me time” in order to cope with the situation. Distance is the key. Get a safe distance from all the negativity and drama happening in your life and get involved in your personal development. After establishing yourself and setting up the boundaries, if needed you may also react but politely.
What is the difference between being 'healthy selfish' and 'unhealthy selfish'?

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You need to learn how to prioritize and care for yourself. So when you are dealing with others, you’ll be displaying the best version of you. For example when your Mother-In-Law intervenes or undermines your authority over your kids, don’t take it personally. Try to understand her point of view as she has raised your spouse whom you love and have more experience when it comes to raising a kid. So have patience. In case of unhealthy selfishness one will not think of others emotions and may hurt them to find out what’s best for them. They will hardly care about how others will feel out of their behaviour, or the effects they leave on a relationship. They will become equally toxic as the other and eventually everything will end up in a big chaos.

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How to avoid unnecessary conflicts
You can set certain boundaries and respect your Mother-In-Law’s feelings. Try to understand no one is entirely bad. Try to understand the reason behind her behaviour. Try to walk in her shoes. No matter how impossible it may sound, but it surely may work.
Avoid involving your partner in the process. He may or may not be in your full support. If needed to just keep him in the loop and try to make him understand your conditions and actions. His support will be your greatest strength, but make sure you don’t distance him from his mother.
It may change her perspective about you and start to co-exist with you. But if she is hurtful or disrespectful then compartmentalize, decompress and compromise as because if you bounce back negatively then it can affect other family members’ relationship with her whom she’s been nice and this can cause chaos in your family atmosphere.
Coping with a difficult mother in law is surely not a cake walk, but eventually, after keeping a considerable amount of patience and positivity, you can mold the consequences in your favour.