I had to make this Gnome on a Toadstool after seeing this costume on your site!! I used a red fleece blanket from Old Navy, 2 pool noodles, white felt (cut out in circles) and elastic for the skirt. I used old black sweatpants that were too small and stuffed them with pieces of pool noodle and a little batting (stuffing) to make them more realistic.
I just put cute socks for the feet and stuffed them as well. I borrowed the blue sweater from my friend, but you could use a blue button down shirt as well, and I borrowed the belt as well. I made the hat from red felt, and used some wool that my mom had from her craft bin for the beard. He just wore tan corduroys for the bottoms.