Lightworks currently supports AVCHD natively in QuickTime containers only (mov, mp4) not MTS containers. MTS files need to be re-wrapped to mp4 or transcoded to MPEG I-frame HD in an AVI container (there is little quality loss). Below are some methods of doing this.
Smooth playback in Lightworks of AVCHD files depends on CPU. Lightworks Beta currently has some long GOP performance problems but improved handling is on the Lightworks roadmap. Lightworks recommends transcoding. Lightworks can transcode AVCHD QuickTime files on import to MPEG I-frame HD which solves playback problems.
I attempt to list pros/cons at beginning of section
Method 1 - MediaCoder
This works inconsistently. The problem with Mediacoder is that it is a GUI/front-end for a variety of back-end engines like FFMPEG and MEncoder etc. Different versions of the back-ends are used in the 32 bit and 64 bit versions of Mediacoder. Our experience has been that while this method generally works with the 64 bit version of Miediacoder it has frequently failed with the 32 bit version because different versions of FFMPEG and MEncoder are installed.

People with 64 bit systems should download and install the 64bit version of MediaCoder and load shaunthesheep's preset. To load the preset in MediaCoder go to File > Load preset
People with 32 bit systems download 32bit V.0.7.5.4799 of MediaCoder (it will be eventually archived at Videohelp.com) and load drkuli's preset. To load the preset in MediaCoder go to File > Load preset
Explanation: the latest versions of MediaCoder are experimental betas and the 32 bit version does not work at the time of writing so use the older V.0.7.5.4799 32 bit version.
The video is re-wrapped (not transcoded) but the ac-3 surround sound 5.1 audio is transcoded to aac. The resulting file plays in VLC with both picture and sound OK. LW imports both video and all 6 surround sound audio tracks at the same time from the mp4 file.
The only weird thing is that the video frame rate is mysteriously doubled from e.g. 25 fps to 50 fps even though "copy video" is selected on the video tab and "original" frame rate is selected on the picture tab. This is drkuli's theory about what is happening. See also this thread on the MediaCoder forum.
These are the steps for the 64 bit version (or load shaunthehseep's preset which does this automatically).
1. import the mts file into Medicoder.
2. on the video tab select "copy video" and "auto select" for both encoder and source.
3. On the picture tab select "original" for frame rate and "keep display AR" in the aspect ratio drop down menu.
4. On the audio tab:
a) select "LC-AAC" in format drop down menu
b) select "FAAC" in encoder drop down menu.
c) In the source drop down menu, select "MEncoder".
d) Make sure "copy audio" is deselected.
e) On the right hand side click the FAAC tab and select "mp4" for both the MPEG version radio button and the container drop down menu.
5. On the container tab select MP4.
6. On the sound tab in the channels drop down menu select "original"
7. Hit the start button.
An mp4 file is created very quickly that plays in VLC with both and sound OK.
These are the steps for the 32 bit version (or load drkuli's preset which does this automatically).
1. import the mts file into Medicoder.
2. on the video tab select "copy video" and "auto select" for both encoder and source.
3. On the picture tab select "original" for frame rate and "keep display AR" in the aspect ratio drop down menu.
4. On the audio tab:
a) select "LC-AAC" in format drop down menu
b) select "FAAC" in encoder drop down menu.
c) In the source drop down menu, select "autoselect", or "MPlayer", or "MEncoder".
d) Make sure "copy audio" is deselected.
e) On the right hand side click the FAAC tab and select "mp4" for both the MPEG version radio button and the container drop down menu.
5. On the container tab select MP4.
6. On the sound tab in the channels drop down menu select "original"
7. Hit the start button.
An mp4 file is created very quickly that plays in VLC with both and sound OK.
Playback in LW
The imported footage does not play smoothly in LW but as drkuli pointed out this is very possibly down to LW's current problems with long GOP. Improved handling of long GOP is on the Lightworks roadmap.
In the meantime, if you want the footage to play smoothly in LW, import the mp4 with Lightworks' transcode function using MPEG I-frame HD/AVI. There is a bitrate choice of 50 MB-250 MB. If you are importing from an external USB drive best use 50 MB bitrate as Greg_E suggests in an earlier post.
Keep the mp4 file for future use when LW's handling of long GOP is improved.
Here is a pdf file showing the settings for all the relevant tabs in the 64 bit version of MediaCoder..
(Thanks to shaunthesheep and drkuli)
Method 2 - XMedia Recode
XMedia Recode is another very good GUI Converter. It can be downloaded Here.
More details coming soon.
Method 3 - Quick Media Converter
This is another method using a GUI tool. I believe files can be queued into a batch and left to process unatended.

It can be downloaded here (Make sure you Download Quickmedia Converter not YouTube converter) http://www.cocoonsoftware.com/
(Thanks to chuckzoots for this)
Method 4 - Virtualdub
Virtualdub can be used to transcode MTS AVCHD files to MPEG I-frame HD in an AVI container which can then be imported into Lightworks. There is very little quality loss.

Here are the steps:
1 To enable Virtualdub to open MTS files, download and install the following:
DirectShow input driver (place this in .\VirtualDub\plugins32\)
Haali Media Splitter (for MP4, M2TS/MTS and Matroska)
ffdshow-tryouts (for MP4, M2TS/MTS and Matroska).
During installation of the last two, check any options for MTS
.
2. Launch Virtualdub and click on File > open video file.
3. In the Open video file dialogue, click on the Files of type drop down menu and select "all types".
4. Navigate to your MTS file and click once on it so that the file name appears in the file name box—but do not click on the Open button yet.
5. Click on the Files of type drop down menu again and this time select "directshow input driver". Click on the Open button. The mts file should open in Virtualdub.
6. Click on the Video menu and select "full processing mode". Then click on Compression and select "Matrox MPEG I-frame HD" from the list. Click on the Configure button and select your file's frame rate and the data rate (50 or 100 should be OK).
7. Click on the Audio menu and select "Full processing mode". Then click on "Compression" and select "no compression (PCM)".
8. Click on FIle > Save Old format AVI, give the AVI file a name, and Save it.
9. Open the AVI in a Lightworks project with the file's frame rate using "Create Link".
This above assumes that you have installed the Matrox codecs as stated in Lightworks install guide.
For a method of converting MTS files with 5.1 audio in Virtualdub see this post.
See this thread for more details about using Virtualdub.
Method 5 - Command line tools
FFMBC
Note: FFMPEG has a long standing bug that makes re-wrapping MTS AVCHD files to QuickTime format (MOV, MP4) problematic. FFMedia BroadCast (FFMBC) is a version of FFMPEG for professional use with Avid, FCP (and Lightworks). It does not have this bug and can be used successfully to convert to QuickTime format. See this thread for details.
And see a video tutorial here which show how to use this method without having to navigate with Windows command prompt.
Re-wrap MTS to MP4
Download FFMBC, unzip it and find the bin folder. Copy and paste it on to your desktop and rename it FFMBC. Place your MTS file in this FFMBC directory. Use Windows command prompt to navigate to this directory and copy and paste this command:
ffmbc -i input.mts -vcodec copy -acodec aac -ab 512k -strict experimental output.mp4
Change "input.mts" in the above string to the file name of your MTS file and change "output.mp4" to the name of the file you want as your converted file.
Your MTS file will be re-wrapped to an mp4 file which will be created in the same FFMBC folder.
If you are not confident navigating with the Windows command prompt use this method:
This Video tutorial shows a method (outlined below) of using a command line string without having to navigate in Windows Command Prompt.
1. Create a new text file and copy and paste this command string into it:
ffmbc -i input.mts -vcodec copy -acodec aac -ab 256k -strict experimental output.mp4
2. Change "input.mts" in the above string to the file name of your MTS file and change "output.mp4" to the name of the file you want as your converted file.
In this example I have a file named tom.mts and I want the converted file to be named tom.mp4
The command string I would use would be:
ffmbc -i tom.mts -vcodec copy -acodec aac -ab 256k -strict experimental tom.mp4
3. Save the text file with the file name AVCHD_2_MP4.txt, close the file, and rename the file extension from .txt to .bat
4. Place the bat file in the FFMBC directory along with your MTS file. Double click on the bat file and the black command prompt window will appear showing the details of your file conversion. The newly converted file will appear in the same folder when it completes.

Re-wrap MTS to MOV
MTS files can be re-wrapped to a mov container. At the moment this has to be done in two stages:
1. re-wrap the MTS video stream to a mov file
2. transcode the ac3 audio stream to uncompressed wav file
Import the mov file and wav files into Lightworks separately.
To re-wrap the video stream to mov use:
ffmbc -i input.mts -vcodec copy -an output.mov
And to transcode from AC3 to wav use:
ffmbc -i input.mts -vn -acodec pcm_s16le output.wav
Batch script for converting from MTS to MP4
This is a script for re-wrapping a batch of files from MTS for mp4.
Put ffmbc exe file in C:\Program Files\ffmbc\ directory.
Brief instructions: be sure that you have set an absolute path to the exe file (i.e. not in the same directory as the mts, otherwise you will have to change it every other time..), then
1. copy and paste the following code in a text file
2. rename the .txt to .bat as you usually do
3. keep it somewhere: you won't need to repeat 1 & 2
4. put the MTS file you want to re-wrap in an empty directory as you always do
5. make a copy and paste of the .bat and put it in the same directory as the MTS file.
6. Double click on the .bat to execute it.
expected results:
- all your mts in a mts\ subdirectory
- all yout mp4 in a mp4\ subdirectory
DO (
md mts
md mp4
)
for %%f IN (*.mts) DO (
"C:\Program Files\ffmbc\ffmbc.exe" -i %%f -vcodec copy -acodec aac -strict experimental -ab 512k %%~nf.mp4
)
DO (
move *.mp4 "mp4\"
move *.mts "mts\"
)
Thanks to Frear for this batch script