I remember someone posting a link to a place that makes custom sized blocks of foam to order, but generally, you can find something roughly that muppet head size. Try asking about offcuts. My local rubber supplies place has offcuts out front for cheap but other places might even throw them out.
If you can't find a block that is big enough, you can totally use two pieces together. What I would do, is get the biggest pieces you can find and glue them together, but just a smallish section, in the center. Because once you have a carved foam head, you have to split it down the center anyway to carve out the space for your hand and whatnot, I wouldn't bother gluing the whole surface area together to start with. If you did, once you go to split it, you'll be trying to cut dried contact cement, which is naturally much harder than foam. Gluing the two halves back together again as a complete head, you'll have a fresh foam surface area to glue.
Further more, if you have a specific design already planned, you can use a stencil-template-pattern [whatever you wanna call it] of the profile of your design, and trace it onto both pieces and you got a good idea of where your hand is going to go inside. You also save a lot of time already having an outline of where to carve the head.
It's also a good idea to sculpt your puppet with it's mouth open, which not only allows you to make more detail around the mouth, but is easier to puppeteer.