Etymology

Coined by Winston Churchill campaigning in the 1906 election, and repeated by him in the parliament,

The conditions of the Transvaal ordinance ... cannot in the opinion of His Majesty's Government be classified as slavery in the extreme acceptance of the word without some risk of terminological inexactitude. — in the parliament 22 February 1906 (quoted in Nigel Rees, Sayings of the Century, 1984)

This first usage has only the literal sense of inaccurate terminology, but it was almost immediately taken up as a euphemism meaning an outright lie.