This sounds like dozens of couples I have talked to before. Most likely the mother is ashamed of your unmarried relations, and she is NOT your Mother in law, if you are not married ! Mom is (I assume) rather old school and does not like the idea of her son shacking up, it might be accepted by a lot of people now days, but she is not one of them.
If you two intend to stay together, and you really want to have a good relationship with her, getting Married would be a good start, and if you don’t care enough to get married, then don’t live together. In her eyes, you two living in sin, is bringing shame to the whole family.
One reason to turn the picture away is she refuses to see you two as a family, and therefor not a part of her family. To her, she has a son, his whore and a bastard grandchild with no name. (sorry but that is the way the old school people see it). In her eyes you should have been married before becoming pregnant, next best would have been get married as soon as you found out, but that ship has sailed.
If you were to get married now it would help, but it is not going to get better overnight, but don’t try to have a pure white (I’m a virgin) wedding, that would only be insulting to her and the family. Make sure that child has its fathers name, if they don’t.
If you got pregnant 2½ years ago, it is going to take at least that long to undo the damage, and probably longer. That will put you back to zero, then you can start building the relationship you want. But the longer you wait, the longer it will take to fix.