These are the most commonly used verbs---lie, lay, and lied---that are found in many forms of writing and are heard in various speeches. Unfortunately, these words alone are often misunderstood. Even the best of speakers, writers, and teachers have made these common errors in this subject for decades.
Lie can be confusing because it also has been used as lay. For example, you could use lie, as in to lie down on a bed. The following verbs lay, lain, and lying also apply to the verb lie. In fact, it is considered a still verb (Painless Grammar, 3rd Edition), meaning that it refers to what a subject is capable of doing. For example, people lie on beds. You also can say: "I lay in bed, yesterday," "I was lying in bed all day," or "I have lain in bed too much."
Lay, on the other hand, is considered an active verb, meaning to place something or to set something down. The verbs laid and laying apply to this verb. For example, a hen lays an egg. You also can say "I lay the cup on the counter, today." Also, you can say, "I laid the pencil on the table, yesterday." For the verb laying, you can use a sentence that refers to what the subject was doing. One example can be, "I was laying the groceries on the table, yesterday."
The verb lied is often used as the past tense. Many people will say, "I lied in bed," which is actually wrong. Again, if you're going to use the past tense, it is better to use lay or lying. Lied, actually, is more appropriate to use when the subject tells a lie. Lied and lying also apply to this verb.