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You can configure Squid to prompt users for a username and password. Squid comes with a program called ncsa_auth that reads any NCSA-compliant encrypted password file. You can use the htpasswd program that comes installed with Apache to create your passwords. Here is how it’s done:

1) Create the password file. The name of the password file should be /etc/squid/squid_passwd, and you need to make sure that it’s universally readable.

[root@bigboy tmp]# touch /etc/squid/squid_passwd
[root@bigboy tmp]# chmod o+r /etc/squid/squid_passwd

2) Use the htpasswd program to add users to the password file. You can add users at anytime without having to restart Squid. In this case, you add a username called www:

[root@bigboy tmp]# htpasswd /etc/squid/squid_passwd www
New password:
Re-type new password:
Adding password for user www
[root@bigboy tmp]#

3) Find your ncsa_auth file using the locate command.

[root@bigboy tmp]# locate ncsa_auth
/usr/lib/squid/ncsa_auth
[root@bigboy tmp]#

4) Edit squid.conf; specifically, you need to define the authentication program in squid.conf, which is in this case ncsa_auth. Next, create an ACL named ncsa_users with the REQUIRED keyword that forces Squid to use the NCSA auth_param method you defined previously. Finally, create an http_access entry that allows traffic that matches the ncsa_users ACL entry. Here’s a simple user authentication example; the order of the statements is important:

#
# Add this to the auth_param section of squid.conf
#
auth_param basic program /usr/lib/squid/ncsa_auth /etc/squid/squid_passwd

#
# Add this to the bottom of the ACL section of squid.conf
#
acl ncsa_users proxy_auth REQUIRED

#
# Add this at the top of the http_access section of squid.conf
#
http_access allow ncsa_users

5) This requires password authentication and allows access only during business hours. Once again, the order of the statements is important:

#
# Add this to the auth_param section of squid.conf
#
auth_param basic program /usr/lib/squid/ncsa_auth /etc/squid/squid_passwd

#
# Add this to the bottom of the ACL section of squid.conf
#
acl ncsa_users proxy_auth REQUIRED
acl business_hours time M T W H F 9:00-17:00

#
# Add this at the top of the http_access section of squid.conf
#
http_access allow ncsa_users business_hours

Remember to restart Squid for the changes to take effect.

Source : www.linuxhomenetworking.com