Scrub down the walls, ceiling and floor (if you don't have a rug). Make sure to pick up the clutter, and organize the room as best you can. The less clutter and mess, the easier it will be to control the energy that collects.
Now, you need to determine where North, South, East, and west are. You can use a compass, or ask someone who knows (if you don't). Once you figure them out, make sure to mark them using any small objects so that you won't forget. The reason you are doing this is because your altar will be setup-facing North because it is the direction of "Earth" and the primary energy you will connect to.
Next, you need to mark your circle. You can use white cord, or any small objects that are sacred to you. (such as candles or figurines) If you have enough room, try to mark the circle between 5 to 9 feet in diameter. (If you don't have enough space your circle can be smaller, but it may be a little more difficult to stay inside of the circle when doing your spell work.
When you mark the circle start in the East and move clockwise around the circle, finishing again in the East. Think of this is a "permanent" circles that you will "redraw" each time you do ritual or spell work. (You'll see how to redraw it later)
Now it is time to decorate your temple (the area around your circle). You can hang meaningful posters, fabric, and pictures. You can set up candles all around the room in any way that feels right for you. Try to set up a mystical feel, one that builds strong emotions for Magick work. The decorating can be simple or elaborate, whatever evokes strong feelings inside of you.
Next, you need to do an initial cleansing and purification of your space. So you must first prepare the cleansing water for this ritual. You will "charge" the water with positive and pure energy from your heart. Then you will use this water to cleanse your space.
This purification is very important to perform correctly or your space will be tainted - and it will never "feel" right. Your Magick will probably suffer as a result.
I can't stress how important the preparation of your cleansing water, and the actually cleansing and purifying of your space is. It so critical for you to actually see the rituals being done that I have included a DVD section on them in the full witchcraft Academy. Not only is there a detailed step-by-step guide for you to follow (with pictures and images), but you will actually see a demonstration of this powerful (and important) ritual.
Once you have fully cleansed and purified your space, it is time to set up your altar. Throughout this process, keep in mind that you can use any materials to set up an altar - but it is best to avoid using synthetic or metal materials. You can use a small wooden table that is between knee and chest high (you may even consider a circular table - which are popular for altars) The idea here is to maintain the natural energies of the Earth by using materials coming directly from the earth (if possible).
Set up your feminine diety elements to the left, and your mail diety elements to the right. (For Wiccans, Goddess elements to the left, and your God elements to the right)
If you want to see a full layout of elements and how to arrange them on your altar to heighten your connection to Magick - see the Home Academy to follow the exact steps. It also includes pictures of different altar setups and a video demonstration of setup and "consecration" of tools and other items on your altar. (This is a must to harmonize the energy within the tools with the energy of the altar and your sacred space)
Replace the markers you used to define the directions (North, South, East, and West) with white candles. In the DVDs you will also see how you can use colored candles that represent each of the elemental colors of the four directions. I like to place more candles around the border of the circle because I like to work my magic by candlelight.
Finally, repeat the purification ritual in the Home Academy for your altar and the circle. Then take a broom, or use your arm to clear out the space of the circle and push any negative or dark energy away.
Your first Witchcraft alter is born, congratulations! Now you can gradually increase it's power to attract the Magick energies you will need in your spell work by adding meaningful objects to it. There are many specific examples of altar setups, and examples of objects that you can add. Above all, these objects must be a reflection of you. The more of "you" that goes into your altar, the more power you will be able to draw from it - and the more protection it will offer as you do your Magick.
Free eBooks (Can Be Downloaded):Herbert William Magoun - The Asuri Kalpa A Witchcraft Practice Of The Atharva Veda
George Lyman Kittredge - Notes On Witchcraft
Gordon Ireland - Faq On Wicca And Witchcraft And More
William Frederick Poole - Cotton Mather And Salem Witchcraft
Alexander Roberts - A Treatise Of Witchcraft