Here's my take on the "faith and works" issue:
There is division within the church on the issue of faith in regard to works when it comes to salvation. One faction work say that salvation is by faith without works, quoting such scripture as the following:
"But now the righteousness of God without the law is manifested, being witnessed by the law and the prophets;Where is boasting then? It is excluded. By what law? of works? Nay: but by the law of faith. Therefore we conclude that a man is justified by faith without the deeds of the law." - Romans 3:21, 27-28
"What shall we say then that Abraham our father, as pertaining to the flesh, hath found? For if Abraham were justified by works, he hath whereof to glory; but not before God. For what saith the scripture? Abraham believed God, and it was counted unto him for righteousness. Now to him that worketh is the reward not reckoned of grace, but of debt. But to him that worketh not, but believeth on him that justifieth the ungodly, his faith is counted for righteousness." - Romans 4:1-5
"This only would I learn of you, Received ye the Spirit by the works of the law, or by the hearing of faith? Are ye so foolish? having begun in the Spirit, are ye now made perfect by the flesh? He therefore that ministereth to you the Spirit, and worketh miracles among you, doeth he it by the works of the law, or by the hearing of faith? Even as Abraham believed God, and it was accounted to him for righteousness." - Gal 3:2-3, 5-6
"For by grace are ye saved through faith; and that not of yourselves: it is the gift of God: Not of works, lest any man should boast." - Ephesians 2:8-9
Then there are those who point to James in support of faith by works:
"Yea, a man may say, Thou hast faith, and I have works: shew me thy faith without thy works, and I will shew thee my faith by my works. Thou believest that there is one God; thou doest well: the devils also believe, and tremble. But wilt thou know, O vain man, that faith without works is dead? Was not Abraham our father justified by works, when he had offered Isaac his son upon the altar? Seest thou how faith wrought with his works, and by works was faith made perfect? And the scripture was fulfilled which saith, Abraham believed God, and it was imputed unto him for righteousness: and he was called the Friend of God. Ye see then how that by works a man is justified, and not by faith only." - James 2:18-24
Is there anyway to reconcile these two points of view? I will attempt to do so. The first thing one should notice about these passages is that it uses the example of Abraham in both instances. Why is that significant? Because it will help distinguish what is meant by "works" in both passages. It is important to keep in mind that Abraham came before the Law of Moses. The reason Paul uses Abraham is because he is trying to make a point about what kind of faith we should have in relation to Abraham. Since Abraham came before the Law of Moses, so naturally the "works" of the Law is not binding to the faith of Abraham. So it is in this sense that we can say that faith is without works. Faith is apart of the strict obedience to the Law of Moses since the Law cannot save. The sacrificial rituals of blood of bulls and goats are inefficient to rid man of sin (Hebrews 10:4 - In fact Hebrews chapters 7-10 is good supplimental reading on this ). The Law is just the school master to bring us to Christ (Galatians 3:24-25). So in this sense, faith apart from "works" (of the Law, that is) saves. But what of James? He uses the example of Abraham also, yet He speaks of faith by works. But what kind of works? The work wrought by grace. Ephesians 2:10 (the verse right after verses 8-9 earlier) says,
"For we are his workmanship, created in Christ Jesus unto good works, which God hath before ordained that we should walk in them."
These are works driven not by Law of Moses, but by love through the operation of the Holy Spirit. Remember what God promised in Ezekiel 36:26-27:
"A new heart also will I give you, and a new spirit will I put within you: and I will take away the stony heart out of your flesh, and I will give you an heart of flesh. And I will put my spirit within you, and cause you to walk in my statutes, and ye shall keep my judgments, and do them."
This is a promise that the Holy Spirit will come abide in us to cause us to obey God. His Law is written on the tablet of our hearts. And the operation is motivated by love:
"He that hath my commandments, and keepeth them, he it is that loveth me: and he that loveth me shall be loved of my Father, and I will love him, and will manifest myself to him." - John 14:21
Jesus summed up the Law as this:
"...Thou shalt love the Lord thy God with all thy heart, and with all thy soul, and with all thy mind. This is the first and great commandment. And the second is like unto it, Thou shalt love thy neighbour as thyself. On these two commandments hang all the law and the prophets." - Matthew 22:37-40
The works of love replaces the works of the law. Paul said in I Corinthians 13:1-3:
"Though I speak with the tongues of men and of angels, and have not charity, I am become as sounding brass, or a tinkling cymbal. And though I have the gift of prophecy, and understand all mysteries, and all knowledge; and though I have all faith, so that I could remove mountains, and have not charity [love], I am nothing. And though I bestow all my goods to feed the poor, and though I give my body to be burned, and have not charity, it profiteth me nothing."
Following the law is nothing if it is not done in love, and that love comes from God through Jesus Christ.
"...He that abideth in me, and I in him, the same bringeth forth much fruit: for without me ye can do nothing." - John 15:5
So it is in this sense that James says,
"Even so faith, if it hath not works, is dead, being alone." - James 2:17
We are to be doers of the word, not hearers only. We are created for good works in Christ. Abraham demonstrated his works apart from the Law, being before the law, but in love for God when he offered up Isaac. He love Issac dearly, but showed that he was willing to give up Isaac for God, but was stopped by the angel.
Faith was fully realized in Abraham demonstrating his love for God over his love for Isaac. God honored this in turn by sparing Isaac. It is a love relationship between God and Abraham.