Favicon is the icon that's located on the left address bar and tab bar on your browser. For Blogger (Blogspot.Com) already have a default favicon like this 
.
Maybe you want a different icon for your blog. How to create a favicon is simple enough. You just need to do some blogger tricks. If you ready start to create costum favicon for your blog, please follow these steps:
1. Create image with square size that you wanna make to favicon [ex: 30x30, 25x25]
2. Then open http://tools.dynamicdrive.com/favicon/
3. Click Browse then choose your image
4. Click Create Icon
5. Click Download FavIcon for save your favicon to your computer
6. Open http://www.picpanda.com/ (sign up first if you have no PicPanda Account)
7. Go to loggin in PicPanda
8. Then click Upload IMAGE
9. Click Browse then choose your image
10. Click Upload and wait a moment
11. Copy the code in the Hotlink for Websites box
12. ex:
<a href="http://www.picpanda.com/"> <img src = "http://www.picpanda.com/images/7eh62uc3dng8t7j5zn.ico" border = "0" alt = "PicPanda. com "/> </ a>Just take the Favicon URL: http://www.picpanda.com/images/7eh62uc3dng8t7j5zn.ico.
Please delete the remaining code
13. Login to your Blogger Account
14. Go to Layout tab
15. Choose Edit HTML
16. Find
<head> with Ctrl + F then type the code that you want to find17. Copy this code
<link rel="shortcut icon" href="CHANGE THIS WITH YOUR FAVICON URL">ex:
<link rel="shortcut icon" href="http://www.picpanda.com/images/7eh62uc3dng8t7j5zn.ico">18. Paste the code below
<head>19. Click SAVE TEMPLATE
Congratulation!
You have done to Create Favicon for your blog. See the result. If no change, please refresh your browser, or delete your Cookies then refresh again. Good Luck.
I can only get the HTML to save by adding an extra / after the " and before the > so it reads ico"/> however the favicon still doesn't show on my blogger powered website
Just used cookie culler XPI in firefox to clear cookies still wont work any ideas ?
Does it have anything to do with the Fragment Identifier on my URL after the # symbol