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Joomla! 1.5 Templates Cookbook
A favicon is the icon you see next to a website's address in your browser's address bar; it's an often-overlooked part of a template design and can really help your website to stand out from others. By default, your website's favicon will often be the Joomla! logo:

We need to create our template's favicon.ico file first; it's best to create a file of 16 by 16 pixels in dimension for use as your website's favicon. For our template, we'll use a j from our logo's design (enlarged to the right for clarity):

Converting your image to a .ico file
There are a number of online services which allow you to create .ico from more common image formats such as PNG, GIF, and JPEG, including Dynamic Drive (http://tools.dynamicdrive.com/favicon/).
1. Once you have settled upon a design for your template's favicon, upload it into your template's directory (templates\rhuk_milkyway\ in this example), overwriting the existing favicon...
Change the font size
Change margin width
Change background colour