Robc had some good advice, but like Lara, it definately didn't fit the situation.
Lara: It sounds like your guy there is a compulsive liar:
Compulsive Lying - Truth About Deception
These are people who manipulate and deceive in order to trick others into control. They backstab and turn friends against you, and spread false rumours in order to paint themselves in a good light, and make you look bad by comparison. They are very toxic, and at a low level of awareness, probably wallowing in shame, guilt or fear. They wouldn't be so bad by themselves, but it's the fact that they are convincing and corrupt all of the relationships around you.
I have a great amount of love for people like this, only because they don't know what they do, and if they can see the light, they can become some of the most fantastic transformed people. Unfortunately, they need a lot of help to see the light, and even the strongest people aren't often enough to help them overcome it. The thing they need most is distance, like with a psychiatrist or therapist. If you are close to them, they will unconsciously try to pull you down to their level. If you are really involved with a compulsive liar, try to get out of the situation, wish him love, and get some distance. As much as you want to help them, the only thing you are really doing is hurting yourself.
It's a fact of life that there are people like this in the world, but just by growing ourselves, we can help to raise the general awareness, and hopefully, someday, theirs as well.