My 9-year-old son is going through a lying phase.  It is driving me crazy!  I am sure it is not a trait you wish for your children either.  So, how do we handle it?  Because we know that trust is the foundation for all relationships, we take the act of lying a little more serious than other wrongdoings.  When you have to discipline your child, make sure he or she knows that while there will be a punishment for wrongdoing, there will be an extra punishment for lying.  Depending on the age of the child, explain what it means to trust them and how when they tell lies a lot you lose trust in them.  I explained to my son that God wants us to tell the truth so that others can trust us.  It is a way for others to know that we follow Jesus, because Jesus would never lie.  I also explained that from now on I would question every answer he gives me until I feel like I can trust him again.  Since he has developed the habit of lying, the second time I ask him is his chance to rethink his automatic response. It is working!  In the beginning, he actually changed his answer several times.  And now, he just gets really irritated when I ask him everything twice!  And, then I just say the word trust, and he is reminded of what his bad habits have done to our trust factor.  It has been a few weeks since he told a lie (that I am aware of), so I think we are moving past this phase.  I will begin asking him questions only once in a few days, then later explain that I trust him again.  I will help him realize how much better that is by asking him which he liked better.  But as in any negative behaviors phase, it has taken a lot of work on the parenting end to ride it through.  We have had to be diligent in our discipline of him.
 
By the way, remember that it is very normal for younger children to lie.  They are just testing the limits and trying new behaviors.  But once they are 7 or so, they should begin to understand the difference between right and wrong.  Also, don't give your child an opportunity to lie.  If they are standing in front of a broken lamp, don't ask, "Did you break this?"  Instead say something like, "Tell me what happened."

If you need an extra example, tell Aesop's fable about the little shepherd boy.  The shepherd boy thought he would play a trick on the people in the village so he yelled, "Wolf, Wolf, come and help me!"  The villagers ran to help, but there was not really a wolf.  A few days later, he cried out, "Wolf, wolf," and the villagers ran to help him, but he had fooled them again.  Later when a wolf really came to attack his sheep, he yelled, "Wolf, wolf, come and help me!"  The villagers did not believe him, so they did not come to help him.  The little shepherd boy lost many of his sheep.  The moral: Nobody believes a liar . . . even when he is telling the truth!