Prophet Muhammad, peace be upon him, allowed lying in the following cases:
1- Lying to the enemy during war (war is deceit).
2- Not telling the complete Truth if you’re trying to reconcile between two people when asked what one said about another during hostile times. In other words, you don’t have to narrate the foul words that one said; just narrate the main point.
3- When one is under a threat or danger.
“Humaid b. ‘Abd al-Rahman b. ‘Auf reported that his mother Umm Kulthum daughter of ‘Uqba b. Abu Mu’ait, and she was one amongst the first emigrants who pledged allegiance to Allah’s Apostle (may peace be upon him), as saying that she heard Allah’s Messenger (may peace be upon him) as saying: A liar is not one who tries to bring reconciliation amongst people and speaks good (in order to avert dispute), or he conveys good. Ibn Shihab said he did not hear that exemption was granted in anything what the people speak as lie but in three cases: in battle, for bringing reconciliation amongst persons and the narration of the words of the husband to his wife, and the narration of the words of a wife to her husband (in a twisted form in order to bring reconciliation between them). (Sahih Muslim Book 032, Number 6303)“ (Source)
To the reader, please visit: What does the Glorious Quran say about lying and about taking credit and recognition for what you do not deserve?
Lying is one of the Signs of the Hypocrite!
Lying is without a doubt frowned upon and condemned in Islam. Prophet Muhammad, peace be upon him, further said that among the signs of the hypocrite is when he speaks, he lies:
Narrated Abu Huraira: “Allah’s Apostle said, “The signs of a hypocrite are three: Whenever he speaks, he tells a lie; and whenever he promises, he breaks his promise; and whenever he is entrusted, he betrays (proves to be dishonest)”. (Translation of Sahih Bukhari, Volume 8, Book 73, Number 117)“
Narrated Abu Huraira: “Allah’s Apostle said, “The signs of a hypocrite are three: (1) whenever he speaks, he tells a lie, (2) whenever he is entrusted, he proves to be dishonest, (3) whenever he promises, he breaks his promise. (Translation of Sahih Bukhari, Volume 3, Book 48, Number 847)“
BIBLE EXPOSITION 