The Imagination then I consider either as primary, or secondary. The primary  Imagination I hold to be the living power and prime agent of all human perception, and as a repetition in the finite mind of the eternal act of creation in the infinite I AM. The secondary Imagination I consider as an echo of the former, co-existing with the conscious will, yet still as identical with the primary in the kind of its agency, and differing only in degree, and in the mode of its operation. It dissolves, diffuses, dissipates, in order to recreate: or where this process is rendered impossible, yet still at all events it struggles to idealize and to unify. It is essentially vital, even as all objects (as objects) are essentially fixed and dead.

FANCY, on the contrary, has no other counters to play with, but fixities and definites. The fancy is indeed no other than a mode of memory emancipated from the order of time and space; while it is blended with, and modified by that empirical phaenomenon of the will, which we express by the word Choice. But equally with the ordinary memory the Fancy must receive all its materials ready made from the law of association.

The Occasion of the Lyrical Ballads(From Chapter 14)
 

Occasion of the Lyrical Ballads, and the objects originally proposed—Preface to the second edition—The ensuing controversy, its causes and acrimony—Philosophic definitions of a Poem and Poetry with scholia(comments or interpretation).

During the first year that Mr. Wordsworth and I were neighbours, our conversations turned frequently on the two cardinal points of poetry, the power of exciting the sympathy of the reader by a faithful adherence to the truth of nature, and the power of giving the interest of novelty by the modifying colours of imagination. The sudden charm, which accidents of light and shade, which moon-light or sunset diffused over a known and familiar landscape, appeared to represent the practicability of combining both. These are the poetry of nature. The thought suggested itself—(to which of us I do not recollect)—that a series of poems might be composed of two sorts. In the one, the incidents and agents were to be, in part at least, supernatural; and the excellence aimed at was to consist in the interesting of the affections by the dramatic truth of such emotions, as would naturally accompany such situations, supposing them real. And real in this sense they have been to every human being who, from whatever source of delusion, has at any time believed himself under supernatural agency. For the second class, subjects were to be chosen from ordinary life; the characters and incidents were to be such as will be found in every village and its vicinity, where there is a meditative and feeling mind to seek after them, or to notice them, when they present themselves.

In this idea originated the plan of the LYRICAL BALLADS; in which it was agreed, that my endeavours should be directed to persons and characters supernatural, or at least romantic; yet so as to transfer from our inward nature a human interest and a semblance of truth sufficient to procure for these shadows of imagination that willing suspension of disbelief for the moment, which constitutes poetic faith. Mr. Wordsworth, on the other hand, was to propose to himself as his object, to give the charm of novelty to things of every day, and to excite a feeling analogous to the supernatural, by awakening the mind's attention to the lethargy of custom, and directing it to the loveliness and the wonders of the world before us; an inexhaustible treasure, but for which, in consequence of the film of familiarity and selfish solicitude, we have eyes, yet see not, ears that hear not, and hearts that neither feel nor understand.

Coleridge's Definition of Poet and Poetry(from Chapter 14)

My own conclusions on the nature of poetry, in the strictest use of the word, have been in part anticipated in the preceding disquisition on the fancy and imagination. What is poetry? is so nearly the same question with, what is a poem? that the answer to the one is involved in the solution of the other. For it is a distinction resulting from the poetic genius itself, which sustains and modifies the images, thoughts, and emotions of the poet’s own mind. A poet, described in ideal perfection, brings the whole soul of man into activity, with the subordination of its faculties to each other, according to their relative worth and dignity. He diffuses a tone, and spirit of unity, that blends, and (as it were) fuses, each into each, by that synthetic and magical power, to which we have exclusively appropriated the name of imagination. This power, first put in action by the will and understanding, and retained under their irremissive, though gentle and unnoticed, control (laxis effertur habenis [it is "carried onwards with loose reins"—ed.]) reveals itself in the balance or reconciliation of opposite or discordant qualities: of sameness, with difference; of the general, with the concrete; the idea, with the image; the individual, with the representative; the sense of novelty and freshness, with old and familiar objects; a more than usual state of emotion, with more than usual order; judgment ever awake and steady self-possession, with enthusiasm and feeling profound or vehement; and while it blends and harmonizes the natural and the artificial, still subordinates art to nature; the manner to the matter; and our admiration of the poet to our sympathy with the poetry...

Finally, GOOD SENSE is the BODY of poetic genius, FANCY its DRAPERY, MOTION its LIFE, and IMAGINATION the SOUL that is everywhere, and in each; and forms all into one graceful and intelligent whole.