A compilation of Line Dance Etiquette collated from different internet sources:

Line dancing involves lots of people. Dancers, from the ripest beginners to the seasoned advanced, stand in lines together, performing steps at the same time. To avoid possible mishaps that often occur when large groups of people squeeze together and move their bodies, a few rules must be followed by all. The following etiquette tips should keep the dance floor running smoothly.

• Dance empty-handed:
  Never carry anything onto the dance floor. Drinks, food, chewing gum and cigarettes should never enter the lines. Not only is it unpleasant, it is also quite dangerous. If a drink or food is spilled in the middle of a dance, someone is bound to slip and fall down. Furthermore, hardwood dance floors should always be treated with care to avoid warping or staining. Leave your snacks on the table.
• Go the right way:
  It always helps to know which direction you’re going! Line dancing is usually done in the middle of the dance floor in an imaginary rectangular space. All dancers move around the dance floor in a counter-clockwise direction, known commonly as the “line of dance.” Sometimes couples will choose to dance around the outside lane…don’t stand in their way, as they always have the right of way.
• Be courteous:
  Always be polite to other dancers on the floor. If the dance floor is crowded, take smaller steps to avoid colliding with other dancers. If a collision should occur, be courteous and apologize, no matter who was at fault. Also, keep conversations to a minimum. Other dancers are trying to concentrate and listen to the music. It’s quite annoying to hear people talking during a dance. Save the chit-chat for the table.
• Relax and enjoy yourself:
  Line dancing is meant to be fun…don’t be intimidated if you are a beginner. Remember that everyone started at the beginning. Practice is key. Look around the dance floor and you will probably see people stumbling, tripping and stepping on toes…but they’re probably laughing about it!

Source: http://dance.about.com/od/typesofdance/qt/Line_Etiquette.htm

A LIST OF USEFUL DANCEFLOOR TIPS

• Never come onto the dance floor carrying drinks, glasses, or cans
• Never stay on the floor to talk – if the music has started, go off the dance floor to chat
• When dancing near beginners – be mindful and courteous and don’t show off!
• Don’t start a different dance, unless there is plenty of room and you sense it is acceptable
• Remember the floor is for everyone. Try to leave the outside lane clear for couple dancers
• Those dancing around the outside lane have the right of way. Don’t block their progress
• If the floor is crowded, take small steps, enjoy the company, but watch for collisions
• If you should bump into someone, it is customary to apologise whether it is your fault or not
• If possible start another line rather than join one which will block the outside lanes
• Don’t be tempted to stop dancing to teach, especially if there is no room.
• Never walk though a line of dancers to cross the floor – always walk round the floor or wait
• Remember everyone was once a beginner; if you can already dance do try to be helpful to newcomers
• When starting off the dance, go to the front so that others can fall in behind you
• And finally, keep your head up, keep smiling and enjoy yourselves

Source: http://www.silver-star-ldc.com/LINE-DANCE-ETIQUETTE