You will need:
white yarn 3 x 4 piece of cardboard rubber band black felt black pipe cleaner ribbon small gold bell embroidery needle hot glue gunWrap enough yarn around the width of the cardboard to cover the cardboard at least 3 times. The more yarn you use, the fluffier your sheep will be. Once you are finished, slide the yarn onto your fingers. Gather the loops together and place a rubber band around the middle cinching it tightly. Cut through the loops on both ends and fluff the yarn out. You should have a pom-pom. If the ends are uneven you can trim them. Cut a face out of the black felt. (To make a face, draw an oval or egg shape sized in proportion to your lamb. Add a small ear to each side of the top of your shape.) Using a hot glue gun glue the face to one end or your pom-pom. Glue a small bell just under the face. Take a black pipe cleaner and cut it in half. Thread both pipe cleaners through the center of the sheep's body and bend slightly so that they stick down on each side like legs. Using an embroidery needle, thread a piece of small ribbon about 10 inches long through the center of the sheep. Tie the ends together to make a hanger.
There is a wonderful Christmas story that you could read after you finish your sheep. It is called The Crippled Lamb by Max Lucado. Check your local library or Christian book store.