I took a class a while ago where I learned to inset a circle into a square using Freezer Paper and Glue. Thought I'd share because this method actually results in a ROUND circle. :lol:
You need background fabric, coordinating fabric, freezer paper, glue (washable, I use both glue stick and Elmer's School Glue), paper scissors and fabric scissors, pencil, ruler, and something to mark a circle.
Step 1: Prepare freezer paper square. Draw the circle in the center. Make sure there is at least 1" between the edge of the circle and the edge of the square.
Step 2: Cut the circle out of the paper.
Step 3: Iron the freezer paper to the wrong side of the background fabric.
Step 4: Mark the circle on the fabric.
Step 5: Cut a circle out of the center, leaving about 1/2"
Step 6: Snip the fabric around the perimeter to just before the pencil mark.
Step 7: Using the fabric glue stick glue the fabric tabs to the paper. Pull them taught.
Step 8: Cut a square of the coordinating fabric larger than the circle.
Step 9: Dab Elmer's school glue (or glue stick) on the fabric tabs and lay the fabric square (fabric side down) centered over the circle.
Step 10: Leave to dry.
Step 11: Carefully pull the tabs off the freezer paper. Make sure to support both sides of the project so you don't distort the fabric or pull the tabs off.
Step 12: Pull the freezer paper off the background fabric.
Step 13: Attach the zipper foot to your sewing machine. Set the piece under the foot so the fabric square is on the bottom. Sew the two fabrics together as close to the drawn circle as the zipper foot allows. Please refer to the picture.
Step 14: Trim the fabric square and attached tabs to about 1/4".
Step 15: Press both sides. (Note: If you want the circle to be truly inset, press as shown. If you want the circle to be raised, press the seam into the circle.)