Thanks to Karin for this Frugal Baby Tip!
You can use just plain old elastic (1/4 in. wide) and cover it with flannel or cotton material so it doesn't come into contact with your baby's skin. First, measure how long you'll need your elastic, keeping in mind that it will need to be stretched as you sew it.
Cut 11/2 in. wide strips of fabric on the bias, long enough to cover the elastic when it's stretched out. Fold it in half, lengthwise and sew it. After trimming it, use a bodkin to turn it right side out. Slip the elastic inside the "sleeve" and tack it to the diaper on one end of the leg hole. You'll have to push up the "sleeve" to get the elastic stretched at first, but pull it down once you've got ahold of it. Don't forget to fold the ends of the "sleeve" under before sewing.
You can pin it on, but keep it stretched tight as you pin it. Use a zigzag stitch as you're sewing and the more you can stretch the elastic as you're sewing, the better it will "snap back" once it's on.