Insert link in contenteditable element

I'm working on a simple blog system and I'm using contenteditable so that users can format the text.

Up to now everything works like a charm.

Next thing i want is that users can add a hyperlink in the text.

The user have to select (part of) the text and click on the link button. After that a popup opens where users should enter the link address.

When the user clicks on the accept button I want to add the link to the text they selected in the contenteditable.

How can I implement this functionality, since I have no clue how to do this?

My site: http://82.170.147.49/blog/3/alpha-release

jsFiddle of my site: http://jsfiddle.net/qhN9j/