The living being cannot be supremely conscious at any stage of his perfection, and the theory that he can be so is a misleading theory. Conscious he may be, but he is not perfectly or supremely conscious.
The distinction between the jīva and the īśvara will be explained in the Thirteenth Chapter of Bhagavad-gītā. The Lord is kṣetra-jña, conscious, as is the living being, but the living being is conscious of his particular body, whereas the Lord is conscious of all bodies. Because He lives in the heart of every living being, He is conscious of the psychic movements of the particular jīvas. We should not forget this. It is also explained that the Paramātmā, the Supreme Personality of Godhead, is living in everyone's heart as īśvara, as the controller, and that He is giving directions for the living entity to act as he desires. The living entity forgets what to do. First of all he makes a determination to act in a certain way, and then he is entangled in the actions and reactions of his own karma.