There are many ways of felting, this is how I do it...
 
002  007  010
 
 
Things you'll need - a towel, a sheet of bubble wrap, a bowl of hot water, a bottle with holes drilled in the lid filled with soopy water and some soap.
And of course lots of lovely fleece, for suppliers search for merino wool tops.
 
Lay out your towel with the bubble wrap on top of it on a sturdy table. Select the colours of fleece you'd like to use for your piece of felt.
 
012  013  014  015
 
Pull some fibres from the fleece you are using for the base of your picture, the piece shouldn't be too thick.
Lay the pieces vertically on the bubble wrap in a horizontal line, then create another row with the fibres slightly overlapping and so on until you have a complete layer.
Next create another layer on top of the first layer but with the fibers running 90 degrees to the bottom layer.
Continue building up the layers until your wool is about 4cm thick, approx 5 layers. This is the base of the picture.
 
017  022  025  027
 
Using the water bottle, sprinkle the water over the fleece. 
Fold the bubble wrap over the wool to make a pocket and flatten it down so that the fleece is completely wet through.
Roll the bubble wrap and fleece up like a swissroll, this will makes sure the fleece is completely wet through and will help when adding the top layers to the picture
 
045  048  054
 
Roll some wool into balls to create the main part of your picture, I'm going to do a flower picture so I'm creating some poppies
You can build up your picture using many different colours on top of each other.
 
061  064  066  068
 
Wet the whole picture as done before with the bottle of soapy water.
Repeat the process of folding the bubble wrap over and rolling it up to soak the wool through.
Turn the felt over so that the detail is facing down, this will make felting a lot easier and make sure the detail doesn't move around. 
 
029  037  070 
 
Work up a larther in your hands with the soap and hot water. 
Rub the fleece with soapy hands, slowly at first to avoid it moving around, continue rubbing the wool until it binds together.
When the fleece starts to feel more rigid, it can be turned over and felted on the image side.
The felting process may take up to 45 minutes
 
040  072  075  076
 
Get rid of any surplus water by ringing the felt out in the hot water bowl. The wool should now be completly felted and not appear fluffy.
Rinse the piece out under a tap making sure all soap is removed and let it dry naturally.