Squid is the defacto proxy system. Either in the lab or at home I use a transparent squid proxy in order to have a global cache system for all my devices (I really hate browser caches that take all you disk space).
For years now, in order to configure a transparent Squid proxy you had to put in the following lines:
plus the complimentary iptables rules in your router:
But Squid 2.6, which comes in Ubuntu 8.04 (Hardy) no longer supports these and the former 4 lines can be substituted by: