As I had previously made a mistake by painting the ceiling with an oil base paint, then I painted the rest with normal latex paint. Over a length of time the oil base started to form into blobs. I had to remove by sanding and then repaint the ceiling. The problem now is that the removal of paint has left a level difference and I need to fill it in. How do I do it?
First, this will require repainting the ceiling or at least touching it up. It depends of the extent of repair needed.
I will assume that the sanding you did has left nothing protruding from the ceiling. Now prime the affected areas, any good primer will work, and allow to dry overnight. The repair is applying one or more coats of drywall mud with sanding after it has dried. The drywall mud will fill in the imperfections.
This is best for a smooth surface. The same procedure applies for a textured surface. But, you will need to do some extra sanding (blending) at the edge of the mud and retexture to match.
I recommend priming the repaired areas before repainting.