Half truths
Pammy, I know what you mean by telling lies is not in your nature. I have real trouble with it myself, it actually makes me feel physically ill to tell lies (what did my parents do to me when I was a child, to cause me to have such a reaction, I wonder??!!) but as everyone above has suggested, sometimes this can't be avoided when you are dealing with people with dementia and you don't want them to be distraught on a daily (or hourly) basis.
However if you are like me and telling lies really really goes against your grain, I have found that lies are not necessarily unavoidable. There are two main categories of lies that people think of, the first is outright lies usually done for bad reasons, white lies that although they are lies are told to avoid people being hurt, and then there is what I do with Dad, and that is, not telling the full truth all the time and using distraction and changes of subject. I.e. The full truth is your sister will not be going home because she is getting progressively worse, but the reason she is staying with you is because she is unwell. If she were to miraculously get better then technically she could live alone, so if I were you trying to not get her upset, when she asks, I'd try simply emphasising why she is at your home now, how concerned you were for her when she first got ill and that you felt that she would be safer if she stayed with you and that you have no problem with her living on her own when she is well. (Note that the 'when' can be taken two ways, as an accepted likelihood or as an if) And you really really want her to be well. (Definetly not a lie) Then move to change subject. Technically not a lie although in some ways I am far more devious than a simple liar and my technique is possibly more immoral, but wording my phrases so that theoreti callyI am not lying sits better with my psyche than the alternative. ..Just giving you the option.
If white lies are more your style though, just follow the guidelines I give my step-daughter when she questions how its ok for adults to tell white lies....I tell her using ones lying powers for good and not evil is okay.