People often ask me how to make a room with a low ceiling look tall. There are many ways to reduce the effect of a shrunk-down living space, one of which is to choose a colour - it can be pale or dark - and paint the walls and ceiling the same. By blurring the transition between the ceiling and the walls, the sense of space can be heightened, literally.
Avoiding things like cornices or beadings along these corners also helps a great deal. I once visited a flat with a very low ceiling. The owner painted the walls in 2-3 different strong colours with a walnut timber cornice around. As if that is not enough, the ceiling lights are also in very elaborate designs. You can imagine the 'squashed' feeling one gets. No wonder they were complaining of a congested feel inside the house and wanted a Home Rejuvenation badly, ha!
If it doesn't help by trying the above method, consider ways to draw your line of vision downwards. A slightly oversized sofa, a patterned rug or a colourful art piece all help to shift one's attention to them, hiding the inherent flaw of the room. Adding vertical stripes and patterns, in floor lamps, wallpaper, tall curtains for example, can help create an optical illusion of height as well.