Regular verbs create their past and past participle forms by adding "d" or "ed" to the stem of their infinitives but irregular verbs create past and past participle forms by altering their stems in unpredictable ways. A number of common irregular verbs give people trouble, particularly: dive, drown, fly, hang, lead, prove, sit, set and shrink.
Lie and Lay seem to give people more difficulty than all the other irregular verbs combined do. It is because the past tense form of lie is lay, so it's indistinguishable from lay in the present tense except in usage. The principal parts of lie are: lie(present), lay(past), lain(past participle). The principal parts of lay are: lay(present), laid(past), and laid(past participle).
As an aid in choosing the correct verb forms, remember that lie means to recline, whereas lay means to place something, to put something on something. Lie means the actor or the subject is doing something by himself or herself. It's what grammarians call a complete verb. When accompanied by subjects, complete verbs tell the whole story. Lay, on the other hand, means the subject is acting on something or someone else; it requires a complement to make sense. Thus lay always takes a direct object. Lie never does.
Here is a tip that i got from the reference site, always remember that lay is a transitive verb and requires a direct object. A transitive verb acts as a conveyor belt, transmitting action or influence from a subject to the object.
Reference site: http://web.ku.edu/~edit/lie.html