Collect old scraps of material or old, worn-out clothing--sheets, shirts and pants all work well. Cut the material into strips about 2 inches across. If the fabric is thin, make it wider. This is to ensure the braids all even out. You will also need a darning or upholstery needle, thick thread and a clothespin.
There are two schools of thought on this next step. Some instructions say to sew the long strips together at the ends by hand or with a sewing machine--making three very long strips of fabric. Then, roll these long strips into balls like you would do with yarn. Other instructions say to sew them together as you braid. This can get very tedious since you are always stopping your braid to sew the ends together. Either way works well.
Once you have completed your long strips of fabric, tie them together at the very end and secure to a bed post, spindle or loop around a door handle or somewhere that will hold the braid as you braid the remaining strips. Don't worry about that end since it will be trimmed later. The clothespin comes in handy here to help hold down the braid.
Keep the material taut as you braid the strips as you would braid hair. As you braid, turn the edge of the material in, so the raw edge doesn't show. This will prevent unraveling. When you are finished, join the strips together, and sew a diagonal seam across the square; then trim the excess.
The shape of the rug will be determined by this first length of braid. The rug will grow on the sides and top at the same rate as you shape the rug. For example, if you want a 3-foo rug, start with a 1-foot braid and wrap it around itself. It will grow out to be 2 by 3 feet. To make an oval rug, start the initial braid 1/3 the size of what you want the finished rug to be. If you want a circular rug, start with a 2- to 3-inch piece, and wrap it around itself to make the size you like.
Sewing the rug together is the last step. Use a large table or a floor. A darning needle or special upholstery needle works to guide the tread though the thick braids. Use a heavy-duty thread, and lace it as you would lace a shoe--back and forth inside the braid loops---sewing the pieces together. Keep the rug flat as you sew, and check it every now and then to make sure it will lay flat. If you spot a ruffle it will be hard to fix later. When you reach the end, carefully tack the end piece against the braids next to it. Return to center, and tack that beginning braid to the next one too. Finished.