1. Go to your user profile. Example: http://www.blog.co.uk/user/ramrali/

2. Go to edit profile: On the top, click My: Media.

Example: See the red circle on Media option.
media
3. In the next screen, Click on upload files option.
media2

4. Press Save in the next screen.

5. Now, start writing a new blog post. In the box where you type the text, in the top, click on the 'select files from your media' option.
media3

6. It shows a new screen with the images. On the required image, click 'Blog This'.