Read Blogger In Draft's post about Favicons.
2. Then click Browse and upload your file. Then click Save.
If you use Blogger in Draft (if you use regular Blogger you won't see this yet) then you might have noticed a new tab in your Page Elements! Well, it's a quick way to add the beloved Favicon to your blog. All you have to do is create the correct size file (usually 16x16 pixels) and upload it to this tab.
Here's how to make an *.ico file in 30 seconds. No software to download...you need just a small picture. You can use *.gif, *.png and *.jpeg. These sites will convert any photo into a tiny picture. Use this site: http://converticon.com/ to convert your picture to an *.ico file.
We used our little bee as our favicon, so you might want to use something that represents your blog.
Some other options are: http://www.convertico.com/ or http://iconverticons.com/