Curtis and Hart (2020) wrote an article arguing that pathological lying - formerly known as pseudologia phantastica should be considered a diagnostic entity. This is a summary of some of the main points.
In the article the authors admit that to link mental illness and pathological lying, one needs to understand the criteria for mental disorder. To do this, the authors mention the DSM - V and I have my copy here and can supply a definition:
Defining Mental disorder
"Mental Disorders are usually associated with significant distress or disability in social, occupational or other important activities."
The authors also mention a definition from the ICD-10:
"set of symptoms or behaviour associated in most cases with distress and with interference with personal functions"
How to define pathological lying
The authors argue that to merge pathological lying with the previous definitions of mental disorder, their definition for PL (pathological lying) should be as follows:
"...persistent, pervasive, and often compulsive pattern of excessive lying behavior that leads to clinically significant impairment of functioning in social, occupational, or other areas; causes marked distress; poses a risk to the self or others; and occurs for longer than 6 months."
As the authors themselves admit, neither the DSM or the ICD classify PL, though they do list it in terms of relevance to malingering etc.
The authors also note that PL is something mentioned in relation to Hare's psychopathy checklist.
The purpose of the paper was to provide quantitative data to support a diagnosis of PL.
The full paper along with the experiment is provided below: