First thing to do is check that you've used real, hand-wash only wool. If it's synthetic or has been made suitable for machine washing, it won't accept lanolin. You can still use it if it's acrylic but treat it as fleece rather than wool. A small percentage of acrylic mixed with wool is ok to use as wool but the more wool in it the better.
If it's wool, lanolising is really easy. Take a half teaspoon of lanolin in a mug, add a squirt of your normal baby wash (like bath stuff) and top it up with boiling water. The lanolin should all melt (may need stirring) and the water should go cloudy. If the water doesn't go cloudy or you can't get it all to mix properly, add a bit more baby wash and try reheating the water in the microwave until it does mix.
Then, pour that into a large bowl (I use a mixing bowl but you can use the sink if it's not needed for other things) and top it up with cold water until there is enough water to cover the soaker and it is tepid. You don't want it hot or very cold. Then put the soaker in there, gently squeeze out any air bubbles and leave it to soak. For the first time, I'd leave it at least overnight, maybe up to 24 hours. Then take it out, squeeze it out gently and roll it up in a towel/fluffy bathmat and stand on it to get as much water out as possible. Lay it flat somewhere warm to dry.
It should then be ready to use but I tend to do things like that at least twice before using overnight.
When you've used it, hang it to air out and it'll be ready to use again. It's ok for it to smell a bit of wee but the smell should go after airing for a few hours. If it doesn't, it's time to relanolise. That's when I usually use a mild wool wash too - follow the instructions on that, then relanolise. Some wool washes have lanolin in them so you don't always need to lanolise after, although I normally do because it takes a few days to dry so I like to do it all at once.
If they get grubby, you can spot clean with a bit of wool wash and some cool water, then just air dry. You can get lanolin spray if you want to top it up without soaking.
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