"It was the hardest decision I have ever had to make," he told the Scunthorpe Telegraph.
Scunthorpe chairman Steve Wharton is holding talks with first-team captain Andy Crosby and physio Nigel Adkins before announcing a caretaker managerial team.
Laws will be unveiled as Wednesday manager on Monday afternoon, with his first game in charge being Saturday's trip to face Ipswich Town in the Championship.