
The ico-format:
16 pixels by 16 pixels.
1, 4 and 8-bit Indexed
and 24 and 32-bit RGB
Supported by: Internet Explorer,
Firefox, Opera, Safari...
How to do it:
1. First of all you need to install the Photoshop free .ico-plugin provided here.
2. Install the plugin by moving the plugin into the "File Formats" folder inside your Photoshop Plugins folder. Start Photoshop.
3. Make your icon in a even aspect ratio image like 64x64 px or 128x128px image, using simple shapes and strong colors matching your profile.
4. Resize your image using Image>Image Size menu. Set size to 16 x 16 pixels(for Internet Exlporer to recognize it). Use "Bicubic Sharper" - which gives you a sharp and distinct resize.

5. Keep tweaking it, and redo no.4 until you are happy.
6. Save your icon using the plugin: File > Save As... Use the .ICO format.
How to add favicon.ico to your web-site
- Put it at the root level of your web site.
- Put a tag as follows in the
<HEAD>...</HEAD> section of your top-level HTML page (home page):
<LINK REL="SHORTCUT ICON" HREF="favicon.ico">
or
<LINK REL="icon" href="/favicon.ico" type="image/x-icon">