Related Posts Widget with Thumbnails for Blogger

1.First of all Login to your blogger dashboard and navigate to Layout > Edit HTML and check the "Expand Widget Templates" check box

2.Now look for

</head>

and replace it with

<b:if cond='data:blog.pageType == "item"'>
<style type="text/css">
#related-posts {
float:center;
text-transform:none;
height:100%;
min-height:100%;
padding-top:5px;
padding-left:5px;
}

#related-posts h2{
font-size: 1.6em;
font-weight: bold;
color: black;
font-family: Georgia, “Times New Roman”, Times, serif;
margin-bottom: 0.75em;
margin-top: 0em;
padding-top: 0em;
}
#related-posts a{
color:black;
}
#related-posts a:hover{
color:black;
}

#related-posts  a:hover {
background-color:#d4eaf2;
}
style>
<script src='http://blogergadgets.googlecode.com/files/relatedthumbs21.js' type='text/javascript'/>
b:if>

head>

 3.Now Find

<div class='post-footer-line post-footer-line-1'>

If you cant find it then try finding this one

<p class='post-footer-line post-footer-line-1'>

Now immediately after any of these lines(whichever you could find) place this code snippet

<b:if cond='data:blog.pageType == "item"'>
<div id='related-posts'>
<b:loop values='data:post.labels' var='label'>
<b:if cond='data:label.isLast != "true"'>
b:if>
<b:if cond='data:blog.pageType == "item"'>
<script expr:src='"/feeds/posts/default/-/" + data:label.name + "?alt=json-in-script&callback=related_results_labels_thumbs&max-results=6"' type='text/javascript'/>b:if>b:loop><a href='http://www.bloggerplugins.org/2009/08/related-posts-thumbnails-blogger-widget.html' style='display:none;'>Related Posts with thumbnails for blogger'http://www.bloggerplugins.org/' style='display:none;'>blogger widgets

4.You can adjust the maximum number of related posts being displayed by editing this line in the code.

var maxresults=5;

5.To edit the title of the widget you can change this line of code

var relatedpoststitle="Related Posts";

To change the colors and all you will have to modify the CSS
source : http://www.bloggerplugins.org/