George MacDonald, a nineteenth-century Scottish preacher, wrote the best fairy tales I have ever read, and I very much recommend them. These are some of the ones I know:
The Golden Key
The Day Boy and the Night Girl (Photogen and Nycterus)
The Lost Princess (the Wise Woman)
At the Back of the North Wind
The Princess and the Goblin
The Princess and Curdie
C. S. Lewis famously said that he regarded George MacDonald as his master. I have also read that Tolkien was inspired by the underground scenes in the Princess and the Goblin.
The charm of the stories is that they speak of things faraway and beautiful and real, without being preachy; they are a child's glimpse of the Incorruptible.