Just set the placeholder attribute. You'll need some js if you want to support browsers which do not process the attribute.

I use Jason Garber's jquery plugin to imitate placeholder for browsers which do not support the attribute.

Are you asking about adding in these labels to an existing form with HTML that you cannot change? Meaning, running Javascript across the form to inject placeholders into the existing fields?

If you're using jQuery, check out my plugin: https://github.com/remybach/jQuery.superLabels.