No, if you work the muscles in your thighs it wont make your but smaller, but if you are burning calories and losing fat of course it will get a little smaller.
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Weights would be a start. Leg extensions, lunges, squats, any number of exercises.
Hi squats is a great thing to do. Try get dvd's to help you if you struggle
This is very possibly due to pressure having been placed on the femoral artery during sleep, causing a more exaggerated version of your foot falling asleep.