26 Bhagavatha - Vamana Avatar.

King Bali, the king of the demons was defeated and killed in the battle by Indra. Bali was brought back to life by the guru of the asuras, Shukracharya (and other descendants of the sage Bhrigu).  They help him perform a sacrifice called Viswajit, intended to conquer the heavens. A majestic chariot emerged from the fire, fully equipped with armour and weaponry. Bali with his powerful generals and army, marched towards Amaravati, the prosperous capital city of Indra.
Indra, was amazed at Bali's recovery and wondered what had made him so unconquerable. He seeks his guru Brihaspathi's advice. Brihaspathi answered that Bali had been infused with the spiritual energy of Shukracharya and it would be near impossible to fight him now. He suggests that Indra and the other gods go into hiding until an opportune time - when Bali disobeys his guru Shukracharya. The gods leave their splendorous abode. Bali, the grandson of Prahlada, occupied Amaravati, which was deserted by the gods.  Enjoying the most prosperous kingdom endowed with overflowing wealth, Bali felt he had accomplished all that he wanted.
Aditi, the mother of the gods, feels distressed that her sons have been hounded out of their abode by the asuras. Sage Kashyapa, her husband, visits her after a long time of abstract meditation. He asks her the cause for her grief. She answers that all their wealth and domain has been usurped by the mighty daityas. She pleads with her husband to find salutary means by which her sons, now exiled, will regain their fortune and glory. Kashyapa wonders at the maya of the Lord and speaks to her with a smile: "Worship Lord Vasudeva, dwelling in the heart of all living beings, for he is the only one who can fulfill your desires." He also teaches her to observe the payovrata, a rigorous vow intended to propitiate the Lord -- performed with milk-diet and with the mind focused the Lord for 12 days. With utmost discipline, Aditi performs the vow and the Lord Vasudeva manifests himself before her.  "I know that you seek the triumphal glory of your sons. The asuras are now invincible, O celestial lady. Therefore, I shall be born to you as your son and redeem the glory of the devas." And he disappears.
In due course, the Lord is born.  Aditi and Kashyapa looked on in wonder, as Vasudeva assumes a very short stature, as that of a dwarf, Vamana.  Eminent sages, lead by Kashyapa, invest him with the sacred thread.  The gods honour him. Bhoomi gives him the deerskin, Chandra (moon god) gives him the sacred staff. Aditi gives him the loin cloth. Dhyauh (god presiding over the sky) gives him an umbrella. Brahma gives him a kamandalu, a wooden vessel to hold water.  Saraswati gives him the aksha mala (a rosary). Kubera (god of wealth) gives him a vessel to receive alms. Uma, (mother of the universe), gives alms. The seven seers (sapta rishis) give him Kusha grass. Thus the brahmin boy, Vamana, began his worship of the fire every day.
Hearing that King Bali was propitiating the Lord, by means of an Aswamedha yagna (a sacrifice), Vamana proceeds to the Bhrigu-Kaccha, on the northern bank of river Narmada.  The priests there and King Bali himself were amazed by Vamana's splendour -- as though he were the divine sage Sanatkumara himself.  Overpowered by his lustre, the Bhrigus (Shukracharya) and King Bali welcome him. Bali washes the feet of Vamana as a mark of respect.  Bali submits "Our land has been consecrated by your tiny feet.  Pray, O brahman, take from me whatever you desire."
Vamana glorifies the ancestors of Bali, Virochana and Prahlada. "O ruler of the asuras, I seek from you a strip of land, three paces long, as measured by my stride. I seek nothing else from your magnanimous self."
Bali replies, "Your words, although commendable, is quite childish. How unwise of you to ask just three paces of land, when I could give you a whole continent. Please accept land enough to afford you a decent living."
Vamana replies: "The dearest objects of the three worlds cannot satiate one who has not been able to subdue his senses and mind. Contentment with whatever is obtained by chance is conducive to liberation. Therefore I ask you only three paces of land from you."
Bali laughingly says, " Take as much as you will." He takes a pot of water to make a solemn vow to grant him the land. His guru Shukracharya, interjects -- "This dwarf is none other than Lord Vishnu, who has come to accomplish the purpose of the gods. I do not approve of what you have promised to him. He will snatch your throne, dominion, fortune and glory and bestow it to his brother Indra."
Bali respectfully submits: " Having promised the brahman, how can I go back on my word?  When sage Dadhichi and King Shibi give away their own lives to living beings, what scruple can be there in giving away mere land? Therefore I shall give the promised land to this brahmachari, even if he is an enemy or Lord Vishnu himself."
Disobeyed by his disciple, Shukracharya cursed the high-minded Bali, "You have grown so arrogant so as to violate my command. You shall soon fall from your high position for having disregarded us."
Bali unmoved by the imprecation, worships Vamana by washing his feet, pours water from his right palm on to Vamana's hand, to solemnise the gift.
Now Vamana proceeds to measure the three paces of land.  The diminutive Vamana, grows and presents himself in his cosmic form. The asuras were seized with fear. With a single stride he measures the earth. With the second stride, he covers the whole of the heavens and the sky, that there was not an atom of space left for the third.
The Lord's foot pierced through all the spheres and reaches Satyaloka, the abode of Brahma. Brahma along with sages Narada, Sanandana, Marichi and the others, bow to the foot of the Lord. The water from the kamandalu of Brahma, which washed the foot of the Lord came to be known as the holy Ganga. Jambavan, the king of the bears, circumambulates the Lord with the speed of thought. 
Vamana, contracts his proportions and becomes diminutive again. Enraged that their master has been deceived by Vamana, the retinue of asura generals rush with weapons to strike at the divine dwarf. Vishnu's attendants laughingly ward them away. Bali stops the asuras. " Retreat, my fellow asuras. The same Lord who had been conducive to our growth and the decline of the gods, is proving the reverse now. None can override the time-spirit through physical strength. Therefore await the time when it turns to our advantage." The asuras withdraw to the netherworld. Garuda binds Bali with the cords of Varuna.
Vamana claims the third pace of the promised land which is now non existent. Bali submits with a calm mind: "Pray, place your third step on my head. I regard as most laudable the punishment inflicted by the most worthy. You are indeed the greatest benefactor to us asuras."
Vindhyavali, Bali's wife prays to Vamana: " O Lord! When there is nothing which one can rightfully call their own, what can they offer as a gift to you, who creates, protects and also destroys the Universe?"
Brahma asks Vamana to excuse Bali, who has already been stripped of everything, and hence no longer deserves punishment.
Vamana replies, " O Brahma, I take away the fortune of whomsoever I show my grace to. A person with wealth and power becomes stiff with pride, and disregards the world and myself. This asura Bali has conquered my invincible maya (power of delusion). Despite the distress, he does not feel perplexed. Subjected to curse and bodily torture (being bound by the cord of Varuna), and deserted by his generals,  this asura had a firm resolve and did not abandon truth. He has already achieved my realm, but since he wished to become Indra, he will rule under my protection during the time of Savarni manvantara. Until such time, he will occupy the subterranean region of Sutala, whose beauty has been enhanced by the architect of the gods, Viswakarma. Agonies of various kinds will never overtake the denizens of that region. Bali, may good betide you." 
Bali, overwhelmed, bows and prays to Vamana and prepares to enter the Sutala. Vamana asks Shukracharya and other priests to accomplish whatever has been left incomplete by Bali.
Vamana restores the sovereignty of the heavens, thus begged by him, to his elder brother Indra, and returns to his own realm.