Matching hat can be found here.

This easy-to-knit baby blanket and hat combination makes a great gift for a new baby. Both are useful and practical and, knitted in soft organic yarns, as delicate as the newborn wrapped within. The simple knit can easily be expanded as the newborn grows.

Finished Size: Hat 14 1/4″ (36 cm)circumference. Blanket 18″ by 24″ (45.5 cm by 61 cm).
Yarn: Blue Sky Alpacas Organic Cotton (100% organic cotton).
Yarn Weight: 150 yd 137 m/100 g: #83 sage, hat, less than 1 ball; blanket, 3 balls; both, 3 balls.
Needles: Sizes 7 and 8 (4.5 and 5 mm): straight.
Gauge: 16 sts and 22 rows = 4″ (10cm) in St st on larger needles.
Notions: Tapestry Needle.
Originally Published: Natural Knits for Babies and Moms (Interweave, 2006).