Before we were born on the earth, we lived in the presence of our Heavenly Father as one of His spirit children. In this premortal existence, we attended a council with Heavenly Father's other spirit children. At that council, Heavenly Father presented His great plan of happiness (see Abraham 3:22–26). The plan of happiness is called by The Church of Jesus Christ of Latter-day Saints the Plan of Salvation.  In presenting the plan of happiness at the council, the creation, fall, and atonement were explained.
In harmony with the plan of happiness, the premortal Jesus Christ, the Firstborn Son of the Father in the spirit, covenanted to be the Savior (see Moses 4:2; Abraham 3:27). Those who followed Heavenly Father and Jesus Christ were permitted to come to the earth to experience mortality and progress toward eternal life. This means that everyone who now exists on earth, existed in the past, or who will live on this earth in the future, gave Common Consent to the plan of happiness, and sustained Jesus Christ as the Savior of the World. Lucifer, another spirit son of God, rebelled against the plan and "sought to destroy the agency of man" (Moses 4:3). He became Satan, and he and his followers were cast out of heaven and denied the privileges of receiving a physical body and experiencing mortality (see Moses 4:4; Abraham 3:27–28).
- And I, the Lord God, spake unto Moses, saying: That Satan, whom thou hast commanded in the name of mine Only Begotten, is the same which was from the beginning, and he came before me, saying—Behold, here am I, send me, I will be thy son, and I will redeem all mankind, that one soul shall not be lost, and surely I will do it; wherefore give me thine honor.
- But, behold, my Beloved Son, which was my Beloved and Chosen from the beginning, said unto me—Father, thy will be done, and the glory be thine forever.
- Wherefore, because that Satan rebelled against me, and sought to destroy the agency of man, which I, the Lord God, had given him, and also, that I should give unto him mine own power; by the power of mine Only Begotten, I caused that he should be cast down;
- And he became Satan, yea, even the devil, the father of all lies, to deceive and to blind men, and to lead them captive at his will, even as many as would not hearken unto my voice (Moses 4:1-4).
The Council's Discussion
Heavenly Father's plan was for his children to come to the earth where they could receive bodies, be tested, and show whether they were worthy to return to Heavenly Father's presence.
- And there stood one among them that was like unto God, and he said unto those who were with him: We will go down, for there is space there, and we will take of these materials, and we will make an earth whereon these may dwell;
- And we will prove them herewith, to see if they will do all things whatsoever the Lord their God shall command them;
- And they who keep their first estate shall be added upon; and they who keep not their first estate shall not have glory in the same kingdom with those who keep their first estate; and they who keep their second estate shall have glory added upon their heads for ever and ever.
- And the Lord said: Whom shall I send? And one answered like unto the Son of Man: Here am I, send me. And another answered and said: Here am I, send me. And the Lord said: I will send the first.
- And the second was angry, and kept not his first estate; and, at that day, many followed after him (Abraham 3:24-28).
However, the separation from God would lead to sin, which would make Heavenly Father's children unworthy to be in His presence. Thus, a sacrifice would be required to atone for the sins of the children.
Jesus Christ, Heavenly Father's first born, already chosen by the Father, exclaimed that he would be willing to make the sacrifice, but that the glory would still be the Father's.
Lucifer had a different idea: he wanted to compel God's children to be righteous so that none would be lost. However, he expected to receive all the glory since he would be responsible for ensuring that no one committed sin. His plan would have denied men their agency and volition and completely thwarted the plan of happiness. The impossibility of his plan shows that it was dishonestly presented; Satan was a liar from the beginning.
- ...for without moral agency no one could become exalted. Today [Satan] continues to activate parts of his evil plan, appealing to the carnal tendencies of man through temptations. If we are not aware, we may find ourselves being lured by Satan’s temptations, and if we follow his plan we will become like him (See Mosiah 16:3). 
Exercising Agency in the Council
The knowledge that the agency of man is an eternal principle was given to both Abraham and Moses in revelations recorded in the Pearl of Great Price. These revelations about pre-mortal existence and the council in heaven give Latter-day Saints information about God's plan and the purpose of life that no other religion understands.
- Heavenly Father is indeed the Father of our spirits, and we are created in His image. We continued to have our moral agency following our spiritual birth. Our spirits were born innocent, but some became more intelligent, noble, and great than others because they exercised more faith and performed greater works in premortal life. During this period (our "first estate"), Satan exercised his agency in attempting to destroy ours, and many chose to follow him. In the Grand Council during premortal life, we each exercised our agency; there were not then, nor will there ever be, any neutrals.
- References in the revelations give evidence that a Grand Council was convened during our premortal life. All of Heavenly Father’s spiritual children were there. The purpose of the council was to prepare us for our earthly experiences. We were taught all that we would need to know to return to Heavenly Father’s presence one day. We did indeed receive “[our] first lessons in the world of spirits and were prepared to come forth in the due time of the Lord.” 
Said Bruce R. McConkie:
- The spirit children of the Father were then taught the terms and conditions of the plan of salvation and were given an opportunity to accept or reject the Father's proposals. Joseph Smith speaks of the "grand council of heaven" in which those destined "to minister to the inhabitants of the world" were "ordained" to their respective callings (Teachings of Joseph Smith, p. 365). [This was] the solemn session (at which, apparently, all of the pre-existent hosts were present) when the Father made formal announcement of His plan of redemption and salvation.