How do I increase the size of an Azure CloudDrive?

Since an Azure drive is essentially a page blob, you can resize it. You'll find this blog post by Windows Azure Storage team useful regarding that: http://blogs.msdn.com/b/windowsazurestorage/archive/2010/04/11/using-windows-azure-page-blobs-and-how-to-efficiently-upload-and-download-page-blobs.aspx. Please read the section titled "Advanced Functionality – Clearing Pages and Changing Page Blob Size" for sample code.

yes you can,

please i know this program, is ver easy for use, you can connect with you VHD and create new, upload VHD and connect with azure, upload to download files intro VHD http://azuredriveexplorer.codeplex.com/

I have found these methods so far:

• “the soft way”: increase the size of the page blob and fix theVHD data structure (the last 512 bytes).Theoretically this creates unpartitioned disk space after thecurrent partition. But if the partition table also expectsmetadata at the end of the disk (GPT? or Dynamic disks), thatshould be fixed as well.
  I'm aware of only one toolthat can do this in-place modification. Unfortunately this tool isnot much more than a one-weekend hack (at the time of this writing)and thus it is fragile. (See the disclaimer of the author.) But fast.
  Please notify me (or edit this post) if this tool gets improved significantly.
• create a larger disk and copy everything over, as you've suggested.This may be enough if you don't need to preserve NTFS features likejunctions, soft/hard links etc.
• plan for the potential expansion and start with a huge (say 1TB) dynamic VHD,comprised of a small partition and lots of unpartitioned (reserved) space.Windows Disk Manager will see the unpartitioned space in the VHD, and can expand thepartition to it whenever you want -- an in-place operation. The subtle point isthat the unpartitioned area, as long as unparitioned, won't be billed, becauseisn't written to. (Note that either formatting or defragmenting does allocatethe area and causes billing.)However it'll count against the quota of your Azure Subscription (100TB).
• “the hard way”: download the VHD file, use a VHD-resizer program to insert unpartitioned disk space, mount theVHD locally, extend the partition to the unpartitioned space, unmount,upload.This preserves everything, even works for an OS partition, but is veryslow due to the download/upload and software installations involved.
• same as above but performed on a secondary VM in Azure. This speeds updownloading/uploading a lot. Step-by-step instructions are available here.

Unfortunately all these techniques require unmounting the drive for quite a lot of time, i.e. cannot be performed in high-available manner.