1. Create you 16px in width and 16px in height .ico file using Gimp or any other image editing software
  2. Name the .ico file favicon.ico
  3. Copy your newly create favicon to the template directory of your Joomla! 1.6****template where you would want the favicon to change via FTP or any other File Managing Application
  4. Refresh your Joomla! 1.6 webpage and you will see that the favicon has changed to your favicon. Joomla! detects this file within the template directory and then places it within the default header information that gets auto generated once the Joomla! website is loaded.