To use Google Analytics, you will need to insert a piece of code, given to you by Google, into your blog. The code looks something like this:
<script src="http://www.google-analytics.com/urchin.js" type="text/javascript">
</script>
<script type="text/javascript">
_uacct = "THE_ACCOUNTID";
urchinTracker();
</script>
Just log into your blog's Administration interface, go to the Settings menu tab, and select Site Options (15).
This will present you with a popup window with various areas to place metadata and script. Choose the Head tab. Finalize everything by clicking on Ok. That's it!

Now just leave Google to do its magic.
It can take up to 4 hours for these changes to be reflected on Google. To check whether they have been picked up by Analytics yet, go to the homepage for Google Analytics, http://www.google.com/analytics/ , login with your username and password, and click on the Check Status button. When the Google monitor has picked up the changes, you will read this message:
Analytics has been successfully installed and data is being gathered now. Your first reports will be ready within twelve hours.
Voila!