Cut the size you need for your design plus an inch or two. Than baste the waste canvas to the material with the horizontals and verticals lined up with the weave of the fabric. When you are done, remove the basting stitches and moisten the waste canvas if possible. You can use a spray bottle or dunk the design in water. Then pick the waste canvas threads out by pulling them with a pair of tweezers.
If you can't wet the design, you can still remove the threads, but it is more difficult to do this.

The work you saw on towels might have used crossstitch fabric tape. This is a ribbon of Aida sewn on to the towel after the embroidery is complete. Remeber to wash the towel and the tape as they may not shrink at compatible rates once the tape is attached. Another idea is to use the grid of checked material, such as gingham, as your sewing guide; this works nicely for aprons and childrens clothing. Finally, there is an entire industry devoted to selling you premade clothing and domestic items with inserts for cross stitch. Try Charles Craft or Craftsmen's Studio.