ShotPacker is a useful UV island packing add-on for Blender by Gumroad user ambi.
Use “Install Add-on from File…” in Blender User Preferences/Add-ons and navigate to shotpacker.zip. Then turn it on in the add-ons tab.
The add-on is located in UV/Image editor Tools tab under Shotpacker.
Island iterations determine how many iterations each island will take. 20 is fast. 200 can be very slow. The function is exponential. The higher the number, more precision you will have.
Rotation is rotation step. 0 is no rotation. 90 preserves texel orientation. For example 20 rotation means the island is rotated to 360/20=18 different positions at every checkpoint. 20 rotation also increases the running time 18x.
Flip allows or disallows mirroring the island over an axis.
Margin determines how big the edge margin is for the island. 100.0 (%) is the length of the entire UV area. So something like 0.5 is in the reasonable range. For example with 1024×1024 textures, 10 pixels is 10/1024 = ~1.0 (%)
When you’re satisfied with parameters, just click Start pack to start the algorithm. Press escape to cancel the execution.
You can optionally turn on Blender console (Main Menu > Window > Toggle System Console) to see what the add-on is doing in a more verbose form.
It’s recommended to CTRL+A (average islands scale), CTRL+P (pack islands) to pre-pack the islands before running the algorithm, if you’re having problems. It ensures that the islands are sorted as Blender sees them.
You can learn more about the tool here.