A potential employer will in general contact your references after you have been on an interview. They will usually call 2 or 3 people.
Don’t hand out references before the interview, but you can note at the end of your resume that “References are available on request”. Otherwise you do not include references in your job application. They will ask you for references during the interview. The exception to this is if you are applying for an academic position, where they will often require references with the application.
You can mail references to the company after the interview or have them with you, which is useful. Bring any letters of reference with you that you feel would improve your situation and have about three good references that they can call. Avoid relatives as a source of reference, unless of course you have worked at your family company for many years. Still, try and avoid using your mom or dad – maybe another person at the firm?
Before you hand out references, make sure you talk to the persons involved! Tell them you are job hunting or going to an interview and ask if they would give you a reference. If you are going to an interview, name the company and the position. That way they are prepared when they get a phone call about you – it makes a much better impression.
Make sure the contact information you give out about your references is correct!