Display Drupal taxonomy tree
Use nested foreach like below.


$terms = taxonomy_get_children(1);
foreach ($terms as $term) {
  $items[] = $term->name;
  $child_term = taxonomy_get_children($term->tid);
  if (!empty($child_term)) {
    foreach ($child_term as $child) {
      $items[] = $child->name;
    }

  }
}
return theme('item_list', array('items' => $items));