WHEN IS A FIB not a fib? When it's a tall tale. Many small children find it difficult to see the difference between lies and their vivid imagination, between reality and fantasy. This can lead some of them, particularly the more imaginative ones, into difficulties.

For small children, lots of things happen as if by magic. Santa miraculously sleigh rides through the sky, comes down the chimney and puts presents under the tree. TV shows, cartoons and books are full of fantastic tales of unlikely happenings from the preschooler's beloved Barney (who changes from a toy to a larger than life dinosaur with dynamic powers) to the classic Beauty and the Beast.

We encourage small children to breath life into soft toys or Baby Born or Action Man so that they can play a make believe game - and we can have a few minutes peace.

Is it any wonder then that they may find it difficult to distinguish between reality and fantasy?

Many small children try out exploratory tales to see how you react - "I was playing in the garden when this big bird came down and ate all my apple." Some create myths exaggerating their own attributes - "I can jump over the house" or "I'm bigger than all the boys in my playschool." Others develop close relationships with imaginary friends.

AS a parent it is best to go along with this with very small children, but as the child gets older - four or five, say - you might explain that his friends may understand these tales and they could cause arguments or stop them wanting to play with him.

Many parents await their children's account of the first day at school with baited breath only to be told it was "okay".

And what did you do? "Nothing..."

Annemarie Donovan's five year old seemingly didn't want to let her down. "He told me, the teacher lined us up and brought us to this Batmobile and we all climbed in and pressed the controls and soared up into the air. We even went upside down and no one fell out, and then we came down and had our lunch."

"My older boy also used to tell tall tales about his teacher," Annemarie says. "Since he had such a vivid imagination, I decided to bide my time before I leapt to his defence.

"I learned to say, `Oh, I better go down and talk to your teacher about this - and then he would hurriedly recall that perhaps he had only been put in the corner for a few minutes rather than in the corridor all day.

"If I'd marched in and let rip at the teacher can you imagine how mortified I'd be? And she'd never trust him again.

"He also used to develop these mysterious tummy pains once a month when he was six or seven. Again, I learned to heartlessly bring him to school and ask if there was a spelling or maths test on - which invariably there was. The pain was genuine, but it was nerves.

"I had to talk to him about there being a time and place for imagination and how I needed to know the truth in order to look after him properly. That sorted it out."

MANY A CHILD gets into hot water for denying he was the perpetrator of the spilt yoghurt on the carpet/teethmarks on baby brother's arm / prize ornament shattered in several pieces.

"My three year old Gareth is always drawing on the walls," his mum says. "And then he says it wasn't him when it couldn't be anyone else!"

Generally your child wants to please you, and subconsciously knows that it would be unwise to say he was responsible, as you're likely to be cross. He's probably denying it because he wishes now that he hadn't done it or he senses your displeasure.

But he's not lying to annoy you. "Michelle repeatedly said she loved her new baby brother, but he kept crying when she was near and then I noticed pink pinch marks on his body when I was changing him," Megan says.

"I really flipped. And then she told me `a bad man came in - and hurt the baby'. I was speechless. We had been expecting some jealousy, but not this sneakiness."

In cases like these, the experts say, the trick is not to over react. Very young children don't understand the concept of right and wrong, so don't accuse them of being devious they don't see it like that.

Severe punishment may simply make them lie more effectively in the future. You need them to know that it is their behaviour you disapprove of not them.

"Denying wrongdoing is the kind of lie that usually gets children into trouble," writes childcare guru Penelope Leach in Baby and Child (Penguin). "Your child breaks his sister's doll by mistake. Faced with it he denies the whole incident. You are probably angrier with him for the lie than you are about the breakage.

"But what matters is that he should recognise the mistake he has made. Confessing is not nearly as important ...

"If your child does admit to something, either because you force it out of him or of his own accord, don't overwhelm him with anger and punishments. You cannot have it both ways. If you want him to tell you when he has done something `wrong', you cannot also be furious with him.

"If you are furious, he would be a fool to tell you next time, wouldn't he?"

The other thing parents must do is set to a good example by avoiding white lies; children won't understand the subtleties.

"Adults lie out of tact, kindness, a desire to avoid hurting other people's feelings," Leach writes. "The child hears them...

"Unless the reasons for these white lies are explained to him, he cannot be expected to see why he must never exaggerate or falsify when you can.