Not all English translations of the title are correct. Some are definitely more accurate than others. One of the most well known, "The Book of the Way and Its Power", actually contains three problems. People never question it because they assume the scholars must be correct - but what if the scholars themselves don't have a firm grasp on linguistic issues?
Before we delve into this topic, let's keep in mind that the correct pronunciation of Tao Te Ching is "dao de jing," where "de" sounds more like "duh" and not like "dee." This matches the Pinyin romanization system, where TTC can be written as Dao De Jing, Daode Jing or Daodejing.
Not as well understood is the fact that even written in the old Wade-Giles romanization system, Tao Te Ching is also supposed to sound like "dao de jing." The way most people mispronounce it, if written in the Wade-Giles system, would have to be T'ao T'e Ch'ing, with apostrophes. This would not correspond to anything meaningful in Chinese.
If this is confusing, don't worry. It confuses most people, Chinese and Westerners alike. Very few people really understand Wade-Giles other than Wade and Giles, and they are both long dead. Since this out-dated system will be gradually phased out by Pinyin, my suggestion is that we not spend too much time on it.
Let's move on to the main question. What's the best way to translate the title?
This is now an English word, appearing in all major dictionaries. If it weren't, we would have to translate it as "the Way". This would not be completely satisfactory, because "Tao" means so much more, so it's a good thing this word has officially become part of the English language.
Nowadays, translating Tao as "the Way" is like translating "deja vu" as "already seen" - not optimal and not necessary. All translators who do this should get docked one point.
This is best translated as "virtue." By coincidence, the English word captures the Chinese word's dual meaning - human goodness as well as the inherent power in things.
Translating Te as "power" loses one half of the the above, and should therefore get graded down another point.
This is usually translated as "book," which is close but not the best. The closest Chinese character to "book" is "shu." The connotation of "ching" is a little bit higher than "shu," so it's really more like "tome" or "classic." Nobody uses "tome," so we'll point to "classic" as the best way to translate Ching.
Lao Tzu's writing is divided into two parts: Tao Ching (chapters 1 to 37) and Te Ching (chapters 38 to 81). Together, they form the Tao Te Ching.
Bring all of the above together, and it becomes easy to figure out the best way to translate the various titles:
Tao Ching = Tao Classic
Te Ching = Virtue Classic
Tao Te Ching = Tao and Virtue Classic = The Tao and Virtue Classic = The Tao and The Virtue Classic
"And" here is implied by the fact that it's two works joined together as one. Other than "the," this is really the only thing that can appear in the English title that is not explicitly stated in Chinese.
Of course, "Tao and Virtue Classic" probably looks unlike any translated title for the TTC you've ever seen, but our focus here is on accuracy rather than popularity.
People are so used to "the book of" that we may have to make a concession here in the interest of having some flexibility. So I'll grudgingly regard "The Book of the Tao and the Virtue" as acceptable.
At this point, perhaps you can see why "The Book of the Way and Its Power" is actually wrong in several ways. Aside from what I have already pointed out, "its" in this title is an unnecessary and incorrect addition that distorts the original meaning.
By the same reasoning, "The Book of the Tao and Its Virtue" would also be wrong. Let me emphasize that this particular point on "its" is not a matter of opinion. There is nothing in the original title that corresponds to, or implies "its." Nothing. Translators who add this word are simply mistaken. Some may insist that this such translators have a different yet equally valid perspective - but that's really just a stubborn lack of willingness to fully understand the issue.
So, let's check with the scholars, to see how well they have done:
Ursula Le Guin
Overall, of all the well-known sources, Encarta and Columbia Encyclopedia have the most acceptable titles. Combine the best parts of the two and you get something much closer to the original title than anything else out there.
So... yes, there is a best way to translate the title. It is not the one and only way, because any variations that follow the rules of language as outlined above would also be the best way.
Congratulations! If you have worked your way through all of the above, then you now possess knowledge that the great majority of Westerners interested in the Tao Te Ching still do not understand very well!
Side note: The most butchered title is probably "The Art of War." The original title was Sun Zi Bing Fa, which mean's "Master Sun's Military Principles." Makes perfect sense, doesn't it? In the original title there is absolutely no "art" and no "war." The character for the soldier, or the miliary is very different from the characters for war.
Why is it that scholars can't seem to get even the simplest titles right? It all goes back to the general lack of Chinese knowledge in the West. In an environment where no one knows much about the Chinese language, the first person who comes up with some sort of translation has an excellent chance of seeing it "stick" and become an established standard - regardless of the quality of that translation.