Imagination has been playing a role in literature since the earliest times.

Tremendous stores of
imagination went into the making of folk literature. Consider the timeless masterpieces such as Homer's
Iliad and Odyssey, Virgil's Aeneid to the retelling of the Faust legend by Goethe.
Though Aristotle first created room for imagination by expanding the expressions of a poet from
the actual to the possible "in accordance with the laws of probability or necessity", it was not until much
later that the capacity and power of imagination was adequately explored.
Romantic critics turn the Eighteenth Century division between reason and imagination to their
own poetic and critical purposes, however. According to P.B.Shelley, Imagination should, rather than
being a deviation or inferior form of mental activity, be placed over the powers of reason as the most
sublime form of human expression. As Shelley puts it: "Reason is to Imagination as the instrument is to
the agent, as the body to the spirit, as the shadow to the substance". Literature as a creative endeavor is
thus described by Shelley as a most basic "expression of the Imagination"
Samuel Taylor Coleridge draws a distinction between the primary and secondary imagination in
order to better understand the desire and the process of artistic creation. In Biographia Literaria, one of
his significant theoretical works, he writes:

“The primary imagination I hold to be the living power and prime agent of all human perception, and as
a repetition in the finite of the eternal act of creation of the infinite I AM. The secondary I consider as an
echo of the former, coexisting with the conscious will, yet still identical with the primary in the kind of its
agency, and differing only in degree, and in the mode of its operation.”

It is the imagination involved in the poetry that produces a higher quality verse. The primary imagination
is a spontaneous creation of new ideas, and they are expressed perfectly. The secondary imagination is
mitigated by the conscious act of imagination; therefore, it is hindered by not only imperfect creation,
but also by imperfect expression.
To further subdivide the act of imagination, Coleridge introduces his concept of fancy. Fancy is
the lowest form of imagination because it "has no other counters to play with but fixities and definites".
With fancy there is no creation involved; it is simply a reconfiguration of existing ideas. Rather than
composing a completely original concept or description, the fanciful poet simply reorders concepts,
putting them in a new and, possibly, fresh relationship to each other. However, Wordsworth strongly
believed that imagination is not only of the unconscious mind, but it is also related to a personal insight.
Kenneth Bowra said of Wordsworth:

Wordsworth was fully aware that mere creation is not enough, that it must be accompanied by a
special insight.

But unlike Wordsworth, Keats managed imagination and fancy in a more balanced way. Bowra best
describes this:

Through the imagination Keats sought an absolute reality to which a door was opened by his
appreciation of beauty through the senses.

Coleridge and Blake share the idea that imagination is a creative power that comes from the
unconscious mind.  Of all the romantics, Blake is the most rigorous in his conception of imagination. He
could confidently say, "One power alone makes a poet's imagination, the divine vision, because for him
the imagination creates reality, and this reality is the divine activity of the self in its unimpeded energy.
His attention is turned towards an ideal, spiritual world, which with all other selves who obey the
imagination he helps to build".
 Coleridge also wrote that poetry "reveals itself in the balance or reconciliation of opposite or
discordant qualities". Through juxtaposition ideas, concepts, and descriptions are made clear. The more
imaginative the juxtaposition is, the more exciting the poem becomes.
He makes use of primary imagination in his work, because it is the kind of imagination he values most,
and avoids secondary imagination or fancy as much as possible. "Kubla Kahn" illustrates his use of
primary imagination:

In Xanadu did Kubla Kahn

A stately pleasure dome decree:
Where Alph, the sacred river, ran
Through caverns measureless to man
Down to a sunless sea.

Coleridge also uses highly imaginative images to create juxtaposition in the poem. He writes, "A sunny
pleasure dome with caves of ice!", and uses this image twice in the poem. The "reconciliation of
opposites" manifests itself in lines such as these. The adjective "sunny" implies warmth, while "ice" is
cold. Together they hint at a darker side to the surfacially idyllic pleasure dome
Thus to Coleridge, imagination has thus grown to cover and continually expand the scope of
human comprehension, placing the artist at the center of new but infinitely interconnected universes of
his or her own creation.
Thus the Romantics define imagination as "a truly creative faculty, rather than simply
rearranging materials fed to it by the senses and the memory. Imagination is a shaping and ordering
power, a modifying force which colors objects of sense with the mind's own light".
When asked how to develop intelligence in young people, Einstein answered: "Read fairy tales.
Then read more fairy tales". If a man of science Einstein felt the need to emphasize on the need for
imagination, it is enough for one to understand its significance to literature.