Childrens movie from 90's puppets and kids?

okay i am trying to remember this movie from when i was a kid, early 90's im guessing. it was about a brother and sister (i think) and they got taken away to this magical land i think they were being babysat, and this big puppet like thing took them with him. i think it was a blue dragon like puppet. and there were other puppets and it was a jungle like theme. i remember them going up this mountain and it was all gliterry. i know this isnt descriptive and kind of vague but its killing me and this is all i remember! someone help!!! it wasn't a famous movie or a series i had it on vhs and im pretty sure the tape or the case was light blue.....