Centos 5.4 - Setup Transparent Squid Proxy for local network

In our network we have setup squid to do transparent proxing for our network clients so that all web bound traffic is redirected via Squid and controlled.

Our firewall configuration is a multi-homed system, whereby there are two network cards (NICs) controlling network traffic. One NIC (eth0) points to an ADSL router and the other NIC (eth1) points to the internal network clients and connects to the internal network switch.

The goals of the project where to:

• setup Squid to act as a transparent proxy server for our network - so that we don't have to individually set each client to point to it.
• since Squid would be used to have all web bound traffic routed through it, we could use central filtering to control what goes in and out of system
• setup various levels of access for various users/groups/client machines - the bosses want unlimited access, some users to be blocked to only sites that they are suppose to use, and restrict some machines to sites they are allowed to (for updates etc)
• reduce bandwidth by serving cached information from Squid

Below we'll outline steps to get Squid working in this configuration using Centos as the base operating system for this rollout.