For those that want to have this without spending $10 for what in my opinion is abhorrent value, I found this article in my archives and have tested it in Lion. Unfortunately I do not know who wrote it so I can't give credit to the author.
I used 'FileBuddy' to find the file as I already have it and it made the task easy. Here is the routine:
If you want to add a Trash Can to your desktop, the following works in Panther.
The .Trash file is hidden so you need to find it somehow; I used WhatSize to locate the folder and double clicked to open it. Drag the .Trash folder to the sidebar of your Finder. Now create a new folder on your desktop, and then create an alias of the brand new folder. Do a "Get info" on the alias folder and click on "Select New Original" and select the .Trash folder on the Finder sidebar. Job done!
Now delete the original folder created on your desktop, and rename and give a swanky new icon to the alias folder.
[robg adds: An easy way to get to the .Trash folder is to hit Shift-Command-G (Go to Folder) and then type /Users/your_username/.Trash and hit return; this should open the trash folder for your user in a Finder window. Personally, I just use Command-Delete so I don't miss the desktop trash in the least, but I've had a few requests for a Panther-compatible trash on desktop hack, so here's one solution.]