I installed the Easytube plugin for WordPress and then insert the youtube tag. The tag I use for the video below is simply [ youtube:URL ] with no blank space after the opening square bracket. Where URL is the Youtube URL of your desired video.
Other available optional parameters is to add in the width and or height. For example the video below is [ youtube:URL 300 ] with no blank space after the opening square bracket.
Found this Anarchy Media Player 2.5 for WordPress. Recommended by Alvin P.
Will play any simple href link to mp3, flv, Quicktime mov, mp4, m4v, m4a, m4b, 3gp as well as Windows wmv, avi and asf files, in the appropriate player on your web page. The WordPress versions also add buttons to the Rich Text Editor for embedding Flash swf and Director dcr movies as well as YouTube, Google Video, iFilm, DailyMotion, Revver, Metacafe, MySpace, Apple iTunes iMix, and GoEar players