A simple class that converts a image to a icon in c# without losing image color data, unlike System.Drawing.Icon; ico with png data requires Windows Vista or above

gistfile1.cs

class PngIconConverter
    {
        /* input image with width = height is suggested to get the best result */
        /* png support in icon was introduced in Windows Vista */
        public static bool Convert(System.IO.Stream input_stream, System.IO.Stream output_stream, int size, bool keep_aspect_ratio = false)
        {
            System.Drawing.Bitmap input_bit = (System.Drawing.Bitmap)System.Drawing.Bitmap.FromStream(input_stream);
            if (input_bit != null)
            {
                int width, height;
                if (keep_aspect_ratio)
                {
                    width = size;
                    height = input_bit.Height / input_bit.Width * size;
                }
                else
                {
                    width = height = size;
                }
                System.Drawing.Bitmap new_bit = new System.Drawing.Bitmap(input_bit, new System.Drawing.Size(width, height));
                if (new_bit != null)
                {
                    // save the resized png into a memory stream for future use
                    System.IO.MemoryStream mem_data = new System.IO.MemoryStream();
                    new_bit.Save(mem_data, System.Drawing.Imaging.ImageFormat.Png);

                    System.IO.BinaryWriter icon_writer = new System.IO.BinaryWriter(output_stream);
                    if (output_stream != null && icon_writer != null)
                    {
                        // 0-1 reserved, 0
                        icon_writer.Write((byte)0);
                        icon_writer.Write((byte)0);

                        // 2-3 image type, 1 = icon, 2 = cursor
                        icon_writer.Write((short)1);

                        // 4-5 number of images
                        icon_writer.Write((short)1);

                        // image entry 1
                        // 0 image width
                        icon_writer.Write((byte)width);
                        // 1 image height
                        icon_writer.Write((byte)height);

                        // 2 number of colors
                        icon_writer.Write((byte)0);

                        // 3 reserved
                        icon_writer.Write((byte)0);

                        // 4-5 color planes
                        icon_writer.Write((short)0);

                        // 6-7 bits per pixel
                        icon_writer.Write((short)32);

                        // 8-11 size of image data
                        icon_writer.Write((int)mem_data.Length);

                        // 12-15 offset of image data
                        icon_writer.Write((int)(6 + 16));

                        // write image data
                        // png data must contain the whole png data file
                        icon_writer.Write(mem_data.ToArray());

                        icon_writer.Flush();

                        return true;
                    }
                }
                return false;
            }
            return false;
        }

        public static bool Convert(string input_image, string output_icon, int size, bool keep_aspect_ratio = false)
        {
            System.IO.FileStream input_stream = new System.IO.FileStream(input_image, System.IO.FileMode.Open);
            System.IO.FileStream output_stream = new System.IO.FileStream(output_icon, System.IO.FileMode.OpenOrCreate);

            bool result = Convert(input_stream, output_stream, size, keep_aspect_ratio);

            input_stream.Close();
            output_stream.Close();

            return result;
        }
    }

Thanks for this!

If you get EndOfStreamException when using the Stream output do this before using it:
output.Position = 0;

Unfortunately this cannot be used on Powershell Core, System.Drawing.Bitmap is not available.

VB.Net version

''' <summary>
''' Public function convertToIcon converts a bitmap image to a icon image stream with all the sizes windows likes.
''' </summary>
Public Class imagingHelper

    ''' <summary>
    ''' Adapted from this gist: https://gist.github.com/darkfall/1656050
    ''' VB.Net version by me, EvertKuijpers of The Netherlands, also known as EAHMK, on october 19, 2024
    ''' Based on the CS.Net version by mdiller on Mar 10, 2018
    ''' Visual Basic .Net Compatible Version
    ''' 
    ''' This work is licensed under CC BY-SA 4.0, https://creativecommons.org/licenses/by-sa/4.0/.
    ''' 
    ''' I do not use imports (System.Drawing, System.Drawing.Drawing2D, System.Drawing.Imaging and System.IO),
    ''' because I am convinced using full names of objects makes code easier to read.
    ''' This way there is no doubt about the namespace that an object stems from.
    ''' </summary>
    Private commentsLocation As Boolean

    ''' <summary>
    ''' Converts a bitmap image to a icon image stream with all the sizes windows likes.
    ''' </summary>
    ''' <param name="inputBitmap">The input bitmap.</param>
    ''' <param name="output">The output stream.</param>
    ''' <returns>Whether or not the icon was succesfully generated.</returns>
    Public Function convertToIcon(inputBitmap As Drawing.Bitmap, ByRef output As IO.Stream) As Boolean
        If inputBitmap Is Nothing Then
            Return False
        End If

        Dim sizes As Int32() = {256, 48, 32, 16}

        Do ' Generate bitmaps for all the sizes and toss them in streams
            Dim imageStreams As New List(Of IO.MemoryStream)
            For Each size As Int32 In sizes
                Dim newBitmap As Drawing.Bitmap = Me.resizeImage(image:=inputBitmap, width:=size, height:=size)
                If newBitmap Is Nothing Then
                    Return False
                End If
                Dim memoryStream As New IO.MemoryStream
                Call newBitmap.Save(stream:=memoryStream, format:=Drawing.Imaging.ImageFormat.Png)
                Call imageStreams.Add(item:=memoryStream)
            Next

            Dim iconWriter As New IO.BinaryWriter(output:=output)
            If output Is Nothing _
            Or iconWriter Is Nothing Then
                Return False
            End If

            Dim offset As Int32 = 0

            ' 0-1 reserved, 0
            Call iconWriter.Write(value:=CByte(0)) ' 8 bits
            Call iconWriter.Write(value:=CByte(0))

            ' 2-3 image type, 1 = icon, 2 = cursor
            Call iconWriter.Write(value:=CShort(1)) ' 16 bits

            ' 4-5 number of images
            Call iconWriter.Write(value:=CShort(sizes.Length))

            offset += 6 + (16 * sizes.Length)

            For i As Int32 = 0 To sizes.Length - 1 Step 1
                ' image entry 1
                Dim sizeToWrite As Int32 = sizes(i)
                If sizeToWrite > 255 Then
                    sizeToWrite = 0 ' Stands for 256
                End If
                ' 0 image width
                Call iconWriter.Write(value:=CByte(sizeToWrite))
                ' 1 image height
                Call iconWriter.Write(value:=CByte(sizeToWrite))

                ' 2 number of colors
                Call iconWriter.Write(value:=CByte(0))

                ' 3 reserved
                Call iconWriter.Write(value:=CByte(0))

                ' 4-5 color planes
                Call iconWriter.Write(value:=CShort(0))

                ' 6-7 bits per pixel
                Call iconWriter.Write(value:=CShort(32))

                ' 8-11 size of image data
                Call iconWriter.Write(value:=CInt(imageStreams(index:=i).Length)) ' 32 bits

                ' 12-15 offset of image data
                Call iconWriter.Write(value:=CInt(offset))

                offset += imageStreams(index:=i).Length
            Next

            For i As Int32 = 0 To sizes.Length - 1 Step 1
                ' write image data
                ' png data must contain the whole png data file
                Call iconWriter.Write(imageStreams(index:=i).ToArray)
                Call imageStreams(index:=i).Close()
            Next

            Call iconWriter.Flush()

            Exit Do
        Loop

        Return True
    End Function

    ''' <summary>
    ''' Resize the image to the specified width and height.
    ''' Found on stackoverflow: https://stackoverflow.com/questions/1922040/resize-an-image-c-sharp.
    ''' </summary>
    ''' <param name="image">The image to resize.</param>
    ''' <param name="width">The width to resize to.</param>
    ''' <param name="height">The height to resize to.</param>
    ''' <returns>The resized image.</returns>
    Private Function resizeImage(image As Drawing.Image, width As Int32, height As Int32) As Drawing.Bitmap
        Dim destRect As New Drawing.Rectangle(0, 0, width, height)
        Dim destImage As New Drawing.Bitmap(width, height)

        Call destImage.SetResolution(xDpi:=image.HorizontalResolution, yDpi:=image.VerticalResolution)

        Using graphics As Drawing.Graphics = Drawing.Graphics.FromImage(destImage)
            graphics.CompositingMode = Drawing.Drawing2D.CompositingMode.SourceCopy
            graphics.CompositingQuality = Drawing.Drawing2D.CompositingQuality.HighQuality
            graphics.InterpolationMode = Drawing.Drawing2D.InterpolationMode.HighQualityBicubic
            graphics.SmoothingMode = Drawing.Drawing2D.SmoothingMode.HighQuality
            graphics.PixelOffsetMode = Drawing.Drawing2D.PixelOffsetMode.HighQuality

            Using WrapMode As New Drawing.Imaging.ImageAttributes
                Call WrapMode.SetWrapMode(mode:=Drawing.Drawing2D.WrapMode.TileFlipXY)
                Call graphics.DrawImage(image:=image, destRect:=destRect, srcX:=0, srcY:=0, srcWidth:=image.Width, srcHeight:=image.Height, srcUnit:=Drawing.GraphicsUnit.Pixel, imageAttr:=WrapMode)
            End Using
        End Using

        Return destImage
    End Function

    ''' <summary>
    ''' Converts a bitmap stream to a icon image stream.
    ''' </summary>
    ''' <param name="input">The input stream.</param>
    ''' <param name="output">The output stream.</param>
    ''' <returns>Whether or not the icon was succesfully generated.</returns>
    Public Function convertToIcon(input As IO.Stream, ByRef output As IO.Stream) As Boolean
        Dim inputBitmap As Drawing.Bitmap = Drawing.Bitmap.FromStream(stream:=input)
        Return Me.convertToIcon(inputBitmap:=inputBitmap, output:=output)
    End Function

    ''' <summary>
    ''' Converts a bitmap file to a icon file of type ico.
    ''' </summary>
    ''' <param name="inputPath">The input path.</param>
    ''' <param name="outputPath">The output path.</param>
    ''' <returns>Whether or not the icon was succesfully generated.</returns>
    Public Function convertToIcon(inputPath As String, ByRef outputPath As String) As Boolean
        Using inputStream As New IO.FileStream(path:=inputPath, mode:=IO.FileMode.Open)
            Using outputStream As New IO.FileStream(path:=outputPath, mode:=IO.FileMode.OpenOrCreate)
                Return Me.convertToIcon(input:=inputStream, output:=outputStream)
            End Using
        End Using
    End Function

    ''' <summary>
    ''' Converts an image to a icon image stream.
    ''' </summary>
    ''' <param name="inputImage">The input image.</param>
    ''' <param name="outputPath">The output path.</param>
    ''' <returns>Whether Or Not the icon was succesfully generated.</returns>
    Public Function convertToIcon(inputImage As Drawing.Image, outputPath As String)
        Using outputStream As New IO.FileStream(path:=outputPath, mode:=IO.FileMode.OpenOrCreate)
            Return Me.convertToIcon(inputBitmap:=New Drawing.Bitmap(original:=inputImage), output:=outputStream)
        End Using
    End Function

End Class

@EvertKuijpers Your VB.NET version works excellently; however (with Option Strick On), I had to fix three errors and several naming rule violations.
Added "As Boolean" to the last function.
Changed "offset += imageStreams(index:=i).Length" to "offset += CInt(imageStreams(index:=i).Length)".
Changed "Dim inputBitmap As Drawing.Bitmap = Drawing.Bitmap.FromStream(stream:=input)" to "Dim inputBitmap As Drawing.Bitmap = CType(Drawing.Bitmap.FromStream(stream:=input), Drawing.Bitmap)".

@Amerigoware1 The missing "As Boolean" is an error for sure. Thank you for finding this. Greetz from Tilburg in The Netherlands.