How to make a transparent Favicon.Ico file

I was toying around with FireFox tonight, and its glaringly better handling of favicon.ico files.

Well, tonight i made one for my sites. And when i saw it on the bookmarks bar, it had a hideous white squared top to it... and that made me think... there HAS to be a way to make that file transparent.

:) thanks to a little photoshop technique and the "ICO (Windows Icon) Format" plug-in that you can find here... i was able to make a favicon.ico file that is transparent, and looks good in both places!!!

1. create the graphic you want to use... preferrably work on a 32 x 32 pixel image
2. size it to 16 x 16 pixels
3. change the color mode to indexed
4. export it using the Gif89a plug-in or photoshop's built in "save for web" and make the background color your knockout color.
5. save this file as a gif. then close the file
6. re-open the file, and now, simply "Save As" and choose "windows icon, ico"... VOILA you have a transparent favicon.ico file :)
7. now follow the instructions mentioned on this site, Mysteries Of The Favicon.ico — How To Create A Favicon In Photoshop