My mother's dementia has worsened and she is now asking about father, as if he were alive. He died 10 years ago. What do I do?

I went through this as well, I did the same for a while trying to explain dad's death. But I too felt this was mean to keep having her heart broke over and over again that her husband was gone. So I began to say he was at work. My dad worked alot and over the years he worked different shifts. So that seemed to work for me and her. When she mentioned dad where he was I would reply work.. and she would usually say well at least he is making me some money for shoes and we would both get a good laugh about it.
Find what answers would be appropriate to give your mom some comfort. This could be just a phase and it will pass.
Unfortunately, mom now has forgot about dad. I show her old black and white photos of them together from time to time. She knows who he is occasionally but the association that he was her husband is no longer there. After 43yrs of marriage her only memories is that when they were teenagers. For me that is so difficult to understand how you can forget a man you were with for so many years.
Don't feel bad about lying to her. Your just saving her from the grief and pain. Let her enjoy good memories even if they last a short time.

I agree that delivering the news of his death over and over serve no useful purpose. I assume that if she forgets that you told her that he died she'd forget any other answer you give her, too. "Dad's on the fishing trip he planned so long with his buddies. I think he'll be gone for a week. They have no phones in that cabin, you know." Or whatever tale would seem plausible and give her comfort. Then perhaps redirect with memories of Dad. "Remember that time he ...." This may be espcially soothing if her long-term memory is still operating.

What a very difficult spot you are in. Congratulations on trying to work out the kindest way to handle it.