My husband and I are the parents of a bright, talkative, personable and imaginative 3-year-old daughter.

Like most children, she enjoys playing "make-believe" and her dad and I are delighted when she includes us in her "let's pretend" games.

Lately we have noticed that she occasionally crosses the line between fantasy and fibbing, and we want to begin teaching her the difference between lying and telling the truth, and also between lying and playing make-believe.

My own mother certainly communicated the importance of truthfulness to me when I was a child, but she did it by overreacting and frightening me -- something I want to avoid with my little girl.

This is the age when the nicest, happiest little children begin to lie and this can make their parents think she has a serious problem.

Relax. A child's imagination is taking wing now and she is beginning to dream, to fantasize, to exaggerate. To lie. And because she is so bright and imaginative, she has started the process a little early.

Whether they start at 3 or 4, the wild, expansive, goofy, harmless lies that young children tell are no different from the make-believe they enjoy when they play house. Children try out different stories the way they try on their parents' shoes and hats.

You don't even have to draw distinctions between "good pretending and bad pretending" when your daughter tells a particularly outrageous story. That would only diminish her joy and limit her dreams, just at an age when she has found out how to entertain herself.

Instead, keep treating her tall tales with good humor, even if they are self-serving. Congratulate her for making up the best stories you ever heard and join in with her, by adding new twists to her plots and turning her storytelling into a game. As long as she knows she's not fooling you, and you know she's not lying out of fear or shame, you don't have to worry.

The fibs that are acceptable and amusing at 3 and 4 and sometimes 5, however, shouldn't be tolerated if they turn into big, fat and frequent lies at 6 or 7, for that would almost surely be a sign that a child was too afraid or embarrassed to tell the truth.

This is when you say, "In OUR family, we never lie!" because the opinion of parents and the power of the family are more important to a child than anything else.

This is not to say that you should postpone all talk about honesty in the formative pre-school years. Just don't introduce the subject when your daughter is in the middle of one of her wild stories because this will make her defensive and a defensive child doesn't listen worth a hoot. It's much better to talk about the value of truth while you're taking a walk or cooking supper.

With this approach your child will learn that honesty is not only the best policy, it is the only policy, and more to the point, the only policy that is permitted in her house. It's also the most essential one. The family that operates without truth will falter and fail, and so will everyone in it.

Unfortunately, there aren't many children's books about lying, but you can give your daughter a copy of "My Big Lie," a beginning reader by Bill Cosby (Cartwheel, $3.99); "Franklin Fibs" by Paulette Bourgeois (Kids Can; $4.50) and "The Berenstain Bears and the Truth" by Stan and Jan Berenstain (Random House, $3.25). These books aren't the greatest, but they will make your points nicely.

Questions may be sent to margukelly@aol.com or to Box 15310, Washington, D.C. 20003.