last time, used online tool on http://www.html-kit.com/favicon.
A favicon should be 16 X 16 pixels with 16 colors and the file name should be favicon.ico. IconEdit32 is a good freeware program that allows you to create favicons as well as icons of other sizes and color depths. IrfanView is an excellent freeware image viewer that supports the icon (.ico) image format. You can use it to shrink one of your regular images to a 16 X 16 size, then decrease the colors to 16 and save as a “.ico” file. I like to use IrfanView to get an image down to specifications, then edit it with IconEdit32. Remember, if you don’t save it as “favicon.ico,” it won’t work. Also, don’t just shrink an image to icon size and rename it with a “.ico” file extension. That won’t work either because it’s not a real icon file.
Installing a favicon on your website
Simply upload the file, favicon.ico to the root web directory of your hosted website with your favorite FTP program, Microsoft FrontPage, Dreamweaver MX or whatever. Make sure your favicon file is named “favicon.ico.” When someone bookmarks your site with a browser that supports favicons, your favicon will appear. Alternatively, you can use this code between the <head></head> (x)HTML tags:
<link rel=”shortcut icon” href=”http://www.thenameofyoursitehere.com/favicon.ico” mce_href=”http://www.thenameofyoursitehere.com/favicon.ico”/>
Where can I get favicons?
You can feast upon Clickfire’s collection of over 100 quality free favicons and download them for use on your website. To find out more about favicons, visit the definitive favicon site, Favicon.com.
Favicons with Photoshop
For a good tutorial on how to create favicons with Photoshop, check out the link below. You need to download a plugin.
http://www.photoshopsupport.com/tutorials/jennifer/favicon.html