This is one of those age-old head-banging issues writers have been ripping their hair out over for...well, ever.
When I'm talking lie versus lay, I'm obviously not talking "lie" as in "you lie like a rug." (Meaning to tell an untruth.) Which...well, that phrase is wrong, because it would be "you lay like a rug." Of course, you could say "you lie like a dog," which technically would be true, except dogs tend to be pretty honest.
Some of you are snickering right now, and some of you are ready to strangle me.
Okay. Let's get started.
LIE - People and animals "lie down" (present tense) or, in other words, they recline.
LAY - You must "lay" something down (the book on the table, for example - again, present tense).
So, if it's something that can put itself down prone onto a surface, it will "lie down."
BUT... (Yeah, you knew there had to be a catch, didn't you?)
Past tense of LIE is LAY. "This morning, before lunch, I lay down for a nap." (I know it doesn't sound right, but it is.)
Past tense of LAY is LAID. "I laid the clean laundry on your bed."
The past participle tense of LIE is LAIN. "I have lain in bed for three days with this damn flu."
The past participle tense of LAY is LAID. "I have laid the clean laundry on your bed, now put it away, you damn slob!"
Here are some links to help you out: