Making a favicon is easy with the help of a few websites. Here's how you can make your own.
Step #1: Generate a favicon from your logo or an image from your computer using one of the many free online tools.
FavIcon from Pics: As the title suggests it let's you use an image from your computer to create a favicon.
FavIcon Generator: Dynamic Drive's favicon generator also allows you to create a favicon from your Twitter profile picture.
Ico Converter: Allows you to also create a favicon from an image on your computer.
Step #2: After you've generated and saved your favicon to your computer log into draft.blogger.com. As of this writing you'll see the new Blogger interface that we will all get one day soon. Do not be alarmed. Click on the arrow next to the little house icon on your dashboard, from the drop down menu select "Layout." This will take you to the section where you add and remove widgets to your blog.
Near the top of the page click the "Edit" link located in the box where the default Blogger favicon is. In the window that pops up select and upload your custom favicon then click "Save arrangement" in the upper-right corner.
That's it, you now have a custom favicon installed on your blog.
Image of a simple shapes or colors work best.
When you generate your favicon choose the 16x16 pixels size as it is pretty much standard.
Complicated images of your garden, an intricate flower or animal may look pixelated or unrecognizable.
If you use a logo or create an illustration use as few colors as necessary.
I changed my blog's favicon back in June on the day the option became available. At the time it took a few days for Blogger to recognize it. If you find that your favicon doesn't change immediately try clearing your browser's cache. If you can see your favicon on the page elements page where you uploaded it, it worked and should appear soon in visitor's browsers.