Cleaning up factor levels (collapsing multiple levels/labels)

Question

What is the most effective (ie efficient / appropriate) way to clean up a factor containing multiple levels that need to be collapsed? That is, how to combine two or more fa

Answer 1

I add this answer to demonstrate the accepted answer working on a specific factor in a dataframe, since this was not initially obvious to me (though it probably should have been).

levels(df$var1)
# "0" "1" "Z"
summary(df$var1)
#    0    1    Z 
# 7012 2507    8 
levels(df$var1) <- list("0"=c("Z", "0"), "1"=c("1"))
levels(df$var1)
# "0" "1"
summary(df$var1)
#    0    1 
# 7020 2507