$ sudo bash
# apt-get install dnsmasq squid
# echo "listen-address=127.0.0.1" >> /etc/dnsmasq.conf
# echo "no-dhcp-interface=" >> /etc/dnsmasq.conf
# vi /etc/dhcp3/dhclient.conf
# # ^ uncomment line #prepend domain-name-servers 127.0.0.1;
# vi /etc/resolv.conf # Add nameserver 127.0.0.1
# /etc/init.d/dnsmasq restart
# vi /etc/squid/squid.conf
http_port 3128
visible_hostname localhost
acl all src 0.0.0.0/0.0.0.0
cache_effective_user proxy
cache_effective_group proxy
http_access allow all
icp_access allow all
positive_dns_ttl 1 month
negative_dns_ttl 1 minute
httpd_accel_port 80
httpd_accel_with_proxy on
httpd_accel_uses_host_header on
cache_dir ufs /cache 400 16 256
cache_store_log none
# mkdir /cache # I have this dir on reizerfs partition
# chown proxy.proxy /cache
# /etc/init.d/squid restart
Configure your browser to use 127.0.0.1:8080.
Also read detailed dnsmasq setup article http://ubuntu.wordpress.com/2006/08/02/local-dns-cache-for-faster-browsing/