Here there are three parts: (a) apprehending the dream-state, (b) emanation and transformation, and (c) dispelling obstacles to dreaming.
Dreaming is induced by latent predispositions, so regard all daytime appearances as being like a dream and like an illusion. Acquire penetrating insight according to the statement in the Perfection of Wisdom, "All phenomena are like a dream and like an illusion." In particular, it is crucial to practice the instructions on daytime appearances and the illusory body. At this time, powerfully imagine that your environment, city, house, companions, conversations, and all activities are a dream; and even say out loud "This is a dream." Continually imagine that this is just a dream.
Then when you go to bed in the evening, cultivate the Spirit of Awakening, thinking, "For the sake of all sentient beings throughout space, I shall practice the illusion-like Samadhi, and I shall achieve perfect Buddhahood. For that purpose, I shall train in dreaming." Then as you lie down, rest on your right shoulder, with your head pointing north, your right hand pressed against your cheek, and your left placed upon your thigh. Clearly imagine your body as your chosen deity [ a practice of Tantric Deity Yoga where one imagines they are the embodiment of a divine figure, in order to actualize our inner purity and dispel the ego].
If your visualization is not clear, establish the [dignity] of thinking, "I am the chosen deity [yidam; the deity you feel close to]." Imagine that on your pillow your head is resting in the lap of your primary spiritual mentor; and vividly focus your attention upon Orgyen Padma at your throat, the size of your thumb joint, with a smiling, lustrous countenance, appearing and yet having no inherent nature. Mentally offer the supplication, "Bless me that I may apprehend the dream-state. Bless me that I may recognize the dream-state as the dream-state." Lie in the sleeping-lion position [described above], and bring forth a powerful yearning to recognize the dream-state as the dream-stare; and while so doing, fall asleep without being interrupted by any other thoughts. Even if you do not apprehend it at the first try, repeat this many times, and earnestly do it with powerful yearning.
In the morning when you wake up, forcefully and distinctly consider, "Not a single one of any of the dreams I had last night remains when I wake up. Likewise, not a single one of all these daytime appearances today will appear tonight in my dreams. There is no difference between the dreams of the day and the night, so they are illusions, they are dreams." That is one session.
If you still do not apprehend the dream-state even after practicing that many times, then with the other practices as they were before, imagine yourself as your single, heroic, chosen deity, and clearly, vividly imagine at your throat your chosen deity once again, the size of your thumb joint. Direct your consciousness without forcing it, and fall asleep while envisioning that you will know the dream-state as the dream-stare. That is the second session.
[The third session is dependent upon knowing Tibetan letters, so we omit it.]
If... you still do not apprehend the dream-state in that way, focus your attention clearly and vividly on a bindu [seed or dot] or light at your throat; and with the anticipation of dreaming, fall asleep and thereby apprehend the dream-state. That is the fourth session.
Meditate by alternating among the meditative objects, and practice with a powerful sense that daytime appearances are dreams. Even the least of practitioners will apprehend the dream-state within one month.
At first, there will be more dreams, then they will become clearer, and then they will be apprehended.
In the event of a frightening circumstance, it is easy to recognize, "This is a dream." It is difficult for it to be apprehended spontaneously, but if it is so apprehended, this is stable. If it is not apprehended in any of those ways, there may be an infraction of your tantric pledges, so apply yourself to [purifying practices, such as] going for refuge [through prayer], cultivating the spirit of awakening, restoration through confession [pratimokcha], the hundred-syllable mantra, the ganacakra offering, avoiding contamination, and meditating in the previous way. By so doing, the dream-state will be apprehended in just two or three months, and eventually you will be able to apprehend it regularly.
While apprehending the dream-state, consider, "Since this is now a dream-body, it can be transformed in any way." Whatever arises in the dream, be they demonic apparitions, monkeys, people, dogs, and so on, meditatively transform them into your chosen deity. Practice multiplying them by emanation and changing them into anything you like. That is the fifth session.
While apprehending the dream-state, by bringing forth a powerful yearning to go to Abhirati in the east or the pure realm of Orgyen in the west, you can go there and request Dharma, To subdue demonic apparitions and so forth, practice emanating yourself as a garuda [heavenly bird] or Hayagriva or the like, and transform them in any way you wish. In addition, practice condensing many things into one, and multiplying one thing into many. That is the sixth session.
Seeing through the dream: Apprehend the dream-state and go to the bank of a great river. Consider. "Since I am a mental-body in a dream, there is nothing for the river to carry away." By jumping into the river, you will be carried away by a current of bliss and emptiness. At first, because of the clinging of self-grasping, you won't dare, but that won't happen once you have grown accustomed to it. Similarly, by seeing through all such things as fire, precipices, and carnivorous animals, all fears will arise as samadhi. The critical point for all of that is training in daytime appearances and the illusory body and powerfully anticipating the dream-state. When on the verge of sleep, it is important that you direct your attention to whatever you are apprehending at your throat, be it your spiritual mentor, your chosen deity, seed syllables [mantras], or a bindu; and it is crucial that this not be interrupted by latent predispositions. That is the seventh session.
Here there are four parts: (i) dispersal through waking, (ii) dispersal through forgetfulness, (iii) dispersal through confusion, and (iv) dispersal through emptiness.
Dispersal through Waking: As soon as novices recognize, 'This is a dream!" they wake up [physically, leaving the dream-state] and there is dispersal of that recognition. To dispel that, maintain your attention at the level of the heart and below, and focus your mind on a black bindu [dot] the size of a pea, called the "syllable of darkness," on the soles of both feet. That will dispel it.
Dispersal through Forgetfulness: This entails apprehending the dream-state, but immediately becoming confused and letting the dream go on as usual. To dispel that, train in the illusory body during the day, and accustom yourself to envisioning the dream-state. Then as you are about to go to sleep, do so with the yearning, "May I know the dream-state as the dream-state, and not become confused." Also cultivate mindfulness, thinking, "Also, when I am apprehending the dream-state, may I not become confused." That will dispel it.
Dispersal through Confusion: If your dreams are solely deceptive appearances of detrimental latent propensities [egos, habits, desires], your awareness becomes diffused and you never recognize the dream-state at all. Therefore, during the daytime powerfully envision dreaming and strongly emphasize illusory body. Apply yourself to purifying obscurations, practicing fulfillment and confession, and performing the ganacakra offering. By forcefully practicing pranayama with the vital energies, and continuing in all this, the problem will be dispelled.
Dispersal through Insomnia: If sleep is dispersed due to powerful anticipation [excitement], and you become diffused as your consciousness simply does not go to sleep, counter this by imagining a black bindu [dot] in the center of your heart. Bring forth the anticipation without force and just for an instant, and by releasing your awareness, without meditating on sleep, you will fall asleep and apprehend the dream-state.
Dispersal through Indolence: First, due to disillusionment [with the cycle of existence] and a spirit of emergence, you may do a little practice in retreat and so on. You may also apprehend the dream-state; but afterwards, as you have not severed your craving for sensual gratification, you become caught up in idle amusements. With a weak disposition, you become completely ordinary, and out of indolence [laziness] you wreck your spiritual practice. Having no pure vision of any of the Dharmas and practices performed by others, you judge them by your own standards and your mind slips into ruminating, "I've done that too and I'm like this now. Others are just like me."For that, meditate on the difficulty of obtaining a human life of leisure and endowment and on death and impermanence. It is most important that you meditate on the faults of the cycle of existence and mentally renounce this life. By applying yourself to solitary, single-pointed practice in retreat and so on, your earlier experiential realization will be resotred, and you will again apprehend the dream-state.
Excerpted from The Natural Liberation of Confusion by Padmasambhava (eighth century AD), published by Wisdom Publications (1998).