Setting Up bit.ly
First, you will have to make an bit.ly account, sign up at ![http://bit.ly]. Go to Menu > Account Settings > bit.ly.
You may then want to use the Safari bookmarklet for posting URLs. To set it up, go to Menu > Settings > Add Bookmarklet to Safari - the follow the instructions in Safari.
When you are on a webpage you want to shorten on Safari, just use the Echofon bookmarklet in the Safari bookmark menu. This will take you to Echofon, with the URL shortened for you in the tweet box.