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Taqiyya, or "dissimulation", is a controversial concept within the Islamic faith that some argue allows for a Muslim to conceal their faith if they are living in a culture where openly practicing would threaten their or their family's life. This practice is more common to Shia Islam than Sunni Islam largely due to the historical persecution of the Shi'ites...at the hands of the Sunnis.
Muhammad authorized lying to improve the chances of successful assassinations, for example in the case of Shaaban Ibn Khalid al-Hazly and Bin Kaab. In the following Hadith, Muhammad said that it's permissible to lie to an enemy without specifying any conditions. Note that the concept of lying to conceal one's faith if the person's life is in danger as mentioned above also exists.
“”Muhammad said: "Lying is wrong, except in three things: the lie of a man to his wife to make her content with him; a lie to an enemy, for war is deception; or a lie to settle trouble between people (Ahmad, 6.459. H)"
This concept has been seized upon by bigots to suggest that all Muslims are constantly focused on deceiving their neighbors to appear more likable, and then once they've lured you into a false sense of security - *bam* - the old fork in the eye.
The truth of the matter is that the standard for employing Taqiyya is particularly high. For example, during the Spanish Inquisition when Muslims (along with Jews) were tortured by the Grand Inquisitor Torquemada, it would have been permissible for a Muslim to claim to convert to Christianity to avoid torture and death for himself and his family, while continuing to practice his faith in secret. Torquemada rarely fell for such deception, however, and despite the pleas of the accused, the torture would continue. Face it, you can't Torquemada anything.
Note that some Muslim apologists, including some Imams, do use factually incorrect statements (*not* Taqiyya) to advance or defend their faith in a manner similar to Lying for Jesus.
The concept is controversial within Islam mainly because it suggests that Muslims should fear the wrath of man more than the wrath of God, whereas the Qur'an teaches that death in the service of one's faith (as in the case of refusing to renounce one's faith even when faced with death) is a highly honorable act, and practically guarantees one's entry into Paradise. Muslim theology generally makes strong distinctions between acts that are forbidden, acceptable, and praiseworthy, so while dying in the service of Islam may be seen as praiseworthy, invoking taqiyya to avoid death could be seen as falling under the "acceptable" category.
Outside of the Muslim community, taqiyya is frequently cited by Islamophobes as evidence that Muslims who aren't extremists are merely lying about their theology.