Thanks to Cathy for this Frugal Baby Tip!

First wash the wool soakers. Then start some hot water running in your
clean bathroom sink. Use a clean bottle with a lid (like a large juice
bottle or something) and run some of the water into it. Add to the
bottle about an inch of lanolin and a tablespoon of vinegar. Put the
lid on and shake it up really well, until the lanolin is all melted.
Put the stopper in your sink and fill it about halfway. Add the
lanolin water from the bottle and swish everything around to mix it
up. Put 2 soakers in. Work the water into them if it is not too hot.
Set the timer for 15 minutes. Every five minutes, go in there and work
the water into the soakers some more. When the time is up, work the
water into the soakers and then wring them out and lay them flat to
dry. They will probably take a couple of days to dry.

I have also heard recommended to use very warm water instead of hot
water. Maybe this depends on whether you have Aristocrats which might
shrink, or soakers which are pretty much well shrunken already.