Some parts of it are Canon some parts arn't. Parts of Lost Tales that directly contradict with something stated as true in the Sil or LOTR would not be considered Canon as they are lesser place. However I personally have no problem accepting the LT as a primary source of Canon information provided that it doesn't contradict any other more "reliable" information.
well, the parts about the istari and so one are good. but the moast crazy sfuff happen in that book. on an other forum, the member Traya said that Ectelion killed three balrogs in that book. I have no memory of that. But if it is so, well than I'm astonished. how can he? he just an elf. everybody who has tried to take on a balrog has died. Fëanor, Gandalf (well he returned but...) and Echtelion himself when he killed Gothmog. so those things. are they "canon"?