I worked it out in the end as follows:
Sub Insert_SqWrap_Image()
Dim shp As Shape
Set shp = ActiveDocument.Shapes.AddPicture( _
FileName:="C:\Users\Edoardo\Documents\My Work\PhD\SkyDrive\Tutoring\Houria\Image Replacement.jpg", _
SaveWithDocument:=True, _
Anchor:=Selection.Range)
With shp
.WrapFormat.Type = wdWrapSquare
.Left = 246
.Top = 50
.Width = 250
.Height = 188
End With
End Sub