A literature review summarises what has already been written about your topic so that:

You do not repeat work already done.
The reader is able to distinguish between your work and ideas and those of others.
There is a basis from which your own study can begin and, hopefully, which you can extend.
You can demonstrate that you have read and understood the work already carried out and are therefore in a better position to continue study in that area.
You can justify the relevance of your dissertation.
You can justify the methodology you have chosen to use.

How well you are able to do the review may depend on your title:

Too vague or all-encompassing = too much material to sift through.

Too focused or specialised = too little information to review.

Structure of a Literature Review

As a general rule, it is best to start your literature review looking at the bigger picture and then increasingly focus onto the specific aspects you are interested in. This is known as a funnel structure.

Select those works or studies which are most relevant or the most important or recent or those which give a historical perspective. Do this carefully so that the review will provide a balanced reflection of past and/or current knowledge on the subject and decide with your supervisor how long this review needs to be (it is commonly about 25% of your word count).

A review is not just a description of the sources and their conclusions; it is a reasoned argument for why your research is interesting and relevant in relation to the existing literature. It uses the sources to back up your points in the same way that an essay does. It is useful to highlight common themes, controversies and questions that arise.

Remember to keep a full list for your reference list/bibliography (or better still, use bibliographic software like EndNote or RefWorks to keep track of your sources).

Additional resource:

There is an excellent section on Literature Reviews in the Final Chapter from Leeds University, with videos from academics explaining what they are looking for when they are marking them.