So You were fortunate enough to be invited to the Google Wave first party!. Once you login you will see a Welcome wave which has links to installing various Google Wave extensions. Here are two ways I found to embed Twitter functionality within Google Wave.
Using Tweety-Wave

Add “tweety-wave@appspot.com” in to your Contacts. Then create a new Wave and drag and drop Tweety-Wave in to the Wave. Then the Gadget will be automatically be opened within the Wave content box. Please remember to enable popup(s) for the Wave webpage. A Twitter oAuth page will appear asking you to authorize Tweety-Wave app to publish Tweets on your behalf. Now you can tweet directly from this wave.
Through TwitterGadget
Create a new private wave. Click on the “Add Gadgets by URL” and enter the values as “http://www.twittergadget.com/gadget_gmail.xml”

{ 5 comments… read them below or add one }
thanks , any idea how can we update facebook status.
I am facing problem in first method, to use tweey by appscout. The twitter gadget is working fine.
Thank you so much for this guide!!!
It worked :)
TwitterGadget is excellent!
nice work, very helpful
cool thx for quick info…it worked!