Hi there, I want to knit a handbag and have seen some great patterns, but a lot of them are felted and I don’t like this look.
I don’t know how you could felt with a front loading automatic anyway 
My question is will I just be able to line the bag and it will hopefully keep its shape?
I think your knitted (but not felted) bag should hold it’s shape if it’s lined. You would want to make sure [I]that [U]the lining[/U] is what is supporting the weight of the contents. [/I]So perhaps make a lining that is slightly smaller/shorter than the bag itself. Or, sew/baste the individual lining pieces to the bag pieces all around all edges FIRST…then seam the ‘lined pieces’.
I’ve seen patterns for knitted bags that aren’t felted and they were all lined to keep their shape (and keep all your stuff inside!) but I did want to mention that you can felt in a front loader. I do it all the time and it works just fine for me.
Thanks for the front loader information, zkimom! 
Thanks for info, I am going to line the bag and hopefully it will look ok.
You might also want to try these things:
–use a firm, not stretchy yarn in a material that wears well; a hard-twisted cotton can work, but so can some silks and other materials. I’ve seen some pretty bags made from sari silk.
–use a tight gauge
–use a firm lining material, even several layers fused together, to give the bag shape
–spray it with Craftgard or Scotchgard when you’re done so you won’t have to wash it as often.
Good luck!
I’ve made a couple of bags and 1 is felted, no is not. I lined both. I heard a pod cast on KP a few weeks ago about knitted bags. They suggested that if you want your bag to “stand up” while sitting on the floor, use a very stiff interfacing. Here is the link to the podcast. It was very infomative.http://community.knitpicks.com/profiles/blogs/podcast-episode-114-lining
BTW, when knitting the straps of handles remember that they will
S-T-R-E-T-C-H…alot, even if felted.