First off, a LOT of native speakers get these words mixed up, so don't worry too much if you can't quite work it out. "Lie" is a verb which means to horizontal on a surface. You lie in your bed, for example. "Lay" is a verb which means to put something down. You lay a child into bed. Sadly, this is where it gets complicated :( The past tense of lie is lay, so you might say "I lay in bed". The past tense of lay is laid, so you might say "I laid him into bed". The present participle, or gerund, of lie is lying. The present participle of lay is laying. I hope that helps, but as I said, this is something which confuses even native speakers. If you're stuck, guessing is fine. Most people won't even notice if you get it wrong.

"How can I distinguish between these words?" ("Distinct" is an adjective, not a verb.) Well, this even trips native speakers up because of their similarities. If you can tell the difference, you're doing pretty well! Here's the basic explanation. "Lie" doesn't need an object. You lie on the ground, probably horizontally. Now here's the tricky bit: the past tense is "lay". The participles are lying and lain. "Lay" as a base verb needs an object. You lay a book on the table. A chicken lays an egg. The past tense is "laid". The participles are laying and laid. "Lie" also has the meaning of saying something false. In this case, the past tense is "lied". The participles are lying and lied.