Use the longest telephoto setting, use the biggest aperture setting (smallest f-number). But note that if you are using a consumer digital camera, it's very, very hard to achieve such an effect as the Depth of Field of consumer digital cameras is inherently high. Film and digital SLRs can achieve the effect better.
Most of the time you will have to be at maximum zoom-in. If you can get a telephoto lens attachment, that will help you to achieve shallower depth of field. The subject must be quite near you, and the background (which you want to be blur) must be quite far away from the subject.
