Why do we want to do this?
Because we do not want people to sniff / logging our activity. So, we would want to encrypt what we are sending and receiving over the net. This is the most easy and cheap way to set up proxy using SSH connection, provided you already have SSH access to a server / host.
[*] Linux server with SSH service running (regular account will do, as long as you have SSH access).
[*] PuTTY, download from here.
[*] Make sure sshd running on the server.
[*] Fire up PuTTY.
[*] Enter your server hostname of IP address in the “Host Name (or IP address)” box.
[*] Enter the port number where sshd is running in the “Port” box.
[*] Enter “Tunnel” in the “Saved Sessions” box.
[*] In the left pane, navigate to: Connection >> SSH
[*] Since we will only use this connection for tunneling only.
Check, “Don’t start a shell or command at all”.
[*] Save bandwidth a bit. Check, “Enable compression”.
[*] In the left pane, navigate to: Connection >> SSH >> Tunnels
[*] Enter “8080” in the “Source Port” box.
[*] Select “Dynamic” and “Auto” in the radio box below.
[*] In the left pane, navigate to “Terminal”.
[*] Hit “Save” button to save the details.
[*] Hit “Open” button to begin tunneling to the server.
[*] Once connected, fire up Firefox.
[*] Navigate to: Tools >> Options >> Advanced >> Network
[*] Under connection label, hit the “Settings” button.
[*] Choose “Manual proxy configuration:”
[*] Enter “127.0.0.1” in the “SOCKS Host:” box.
[*] Enter “8080” in the “Port:” box next to “SOCKS Host:”.
[*] Hit “OK” button, again “OK” again to close the Options window.
[*] Make sure the proxy is working by browsing to a site that will display your IP Address.