In act 3, John Proctor confesses to adultery as a last resort to undermine Abigail, prove the girls are frauds, and put an end to the unjust proceedings. In order to prove this weighty accusation against Abigail, Deputy Governor Danforth calls Elizabeth to testify in front of the court. According to John, Elizabeth is honest and cannot tell a lie. If Elizabeth tells the truth, testifying against Abigail, the witch trials will abruptly end, and the girls will be severely punished for their lies.
Tragically, Elizabeth lies by testifying that her husband did not commit adultery, which dooms John and influences Reverend Hale to quit the court. John's credibility is completely ruined, and he is depicted as an enemy of the court. Elizabeth thinks she is doing the right thing by protecting her husband's reputation but, ironically, makes the situation much worse. Reverend Hale recognizes that it is natural for a woman to lie under those circumstances, and he begs Danforth to reconsider.
Unfortunately it is too late, and Danforth views Elizabeth's lie as the perfect opportunity to solidify the court's authority. To make matters worse, Elizabeth's lie bolsters Abigail's influence, portrays her as a beacon of truth, and gives her the confidence needed to turn the tables on Mary Warren. Following Elizabeth's lie, Abigail pretends to see Mary Warren's threatening spirit in the rafters, and Mary accuses John of colluding with the devil.
In denying her husband's affair with Abigail Williams, Elizabeth genuinely thinks she's doing John a favor. She knows how important his reputation is to him and so, understandably, doesn't want any scandal attached to the family name. So when she stands before Deputy Governor Danforth in open court, the most that she will admit to is that she felt jealous of John with regards to Abigail.
Elizabeth may very well think she's doing John a big favor by denying the affair, but in actual fact, she's unwittingly getting him deeper into trouble. Unbeknownst to Elizabeth, John has recently confessed to having an affair with Abigail, attempting to expose her as a liar. But after Elizabeth's testimony, it now looks like it's John who's the liar. Thanks to her, his credibility lies in tatters. At the same time, Abigail's position has only been strengthened.
It now looks, for all the world, as if John's confession of his affair with Abigail was all part of a desperate attempt to save himself from the gallows. Even though that's not the case, it's a perfectly reasonable conclusion to draw now that Elizabeth, a woman with a reputation for honesty, has openly denied that any such affair ever happened.
Further Reading
In Act 3, Elizabeth's lie further incriminates her husband and causes the court to distrust Proctor's veracity.
Accordingly, when Elizabeth is brought before Danforth, she refuses to confess that her husband has committed the crime of lechery. All she will admit to is that she was jealous of Abigail, and she imagined that Proctor had become infatuated with the girl. Ostensibly, her suspicions...
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were the only reason she had Abigail removed from the household. Elizabeth states that her husband is a "goodly man" who never turned from her; essentially, she lies to save Proctor. However, Elizabeth makes the situation worse for her husband.
Hale understands how a wife might lie to save a beloved husband, but Danforth seems impervious to such an eventuality. The gullible Danforth is further manipulated by Mary, who now claims that Proctor will murder her if Elizabeth hangs. In the end, Danforth dispatches orders for Proctor to be jailed, and Hale quits the court. Until now, Hale has been arguing for the possibility of Proctor's innocence. After Elizabeth's lie (and Mary's accusation) however, Hale loses his own credibility and is humiliated by his previous, vocal support for Proctor.
Additionally, with Proctor in prison, Elizabeth is bereft of her husband's emotional support during her pregnancy. So, Elizabeth's lie leads to negative consequences for both Proctor and her. In the end, Proctor is hanged for his supposed guilt even though he is innocent. If Elizabeth had not lied, the guilty parties might have been called to account for their own falsehoods.
The result of Elizabeth's lie is to make a bad situation worse for herself and Proctor. She is asked by Danforth whether her husband had an affair with Abigail, and she denies it, wanting to save Proctor's reputation. However, she does not know that Proctor has already confessed to this just a few moments before, and furthermore, that he declared emphatically to Danforth that Elizabeth is strictly truthful. Hale realises her innocent motive for lying, that she simply wanted to protect her husband, but Danforth's suspicions of the Proctors increase because of it. Also, if Elizabeth had told the truth about Proctor and Abigail, Abigail would have been discredited in court. As it is, Abigail emerges even stronger from the scene, particularly when she further manages to convince Danforth that she and the other girls are being attacked by Mary Warren's spirit, while Proctor ends up in jail.