Direct speech refers to quoting someone's exact words, while indirect speech reports what someone said without using their exact words. This document defines and differentiates between direct and indirect speech. It provides examples and discusses rules for changing direct speech to indirect speech, such as changing pronouns to third person and changing verb tenses. The rules cover pronouns, verb tenses, modals, and place/time expressions. Exercises are included for students to practice transforming direct speech to indirect speech.