DHCP, Dynamic Host Configuration Protocol  is the protocol used by network devices like a PC or a printer (DHCP clients) to obtain IP Address, Default Gateway, Domain Name, DNS Servers, NetBIOS servers and more that helps the device to work properly in an IP Network.

While in an ideal scenario, most if not all organisations run the DHCP server on  a Windows server or a Linux/Unix server. While this is justfiable in bigger corporate and enterprise networks, a smaller network like a branch office can be supported by a local Router, Switch or a Firewall can run a DHCP server without the need of an additional server hardware to run DHCP. Most of the routers, firewalls and some switches do have a DHCP server builtin. Most of the new Cisco Routers and Switches running Cisco IOS can run a DHCP server.

The following procedure helps you to setup a Cisco Router or a Catalyst Switch as DHCP server (I use a Cisco Router here):

Enable DHCP Service on the Router

dhcp-router# conf t

dhcp-router(config)# service dhcp

Create DHCP IP Pool

dhcp-router(config)# ip dhcp pool IP-POOL

where IP-POOL is the name of the DHCP IP Pool

Add Network & subnet mask to the DHCP Pool

 dhcp-router(dhcp-config)# network 192.168.1.0 /24

Add Default Gateway for the clients

dhcp-router(dhcp-config)# default-router

Specify the Domain Name for the clients

dhcp-router(dhcp-config)# domain-name mycompany.com

Specify the DNS Servers for the Clients

dhcp-router(dhcp-config)# dns-server 192.168.1.10 192.168.1.11

where 192.16.1.10&11 are the IP address of the local DNS servers 

Specify the NetBIOS WINS Servers for the Clients (if any)

dhcp-router(dhcp-config)# netbios-name-server 192.168.1.12

where 192.16.1.12 is the Microsoft WINS server 

Set the lease period

dhcp-router(dhcp-config)# lease 8

Sets the Lease for 8 days.

Add Exclusion list (if any)

dhcp-router(config)# ip dhcp exclude-address 192.168.1.25 192.168.1.35

Where 192.168.1.25 & 192.168.1.35 are the Start and End IPs for the range of IPs to be excluded.

This will configure the DHCP server on a Cisco Router or Switch.

Dnsmasq is an opensource light-weight,easy to configure and administer DNS and a DHCP Server. Dnsmasq is ideally suitable for smaller networks like Small Office and Home Office networks (SOHO) and branch office networks. Dnsmasq can be run on old PC and is very easy to configure and administer. Dnsmasq is seen to support upto 1000 nodes on a network.

In essence, Dnsmasq is a Caching nameserver and a DNS forwarder with DHCP enabled on it. Dnsmasq can provide nameservice for local hosts while forwarding the queries for global public resources to a Public DNS Server (like an ISP DNS server). So, small networks which are behind a DSL/ADSL router or even a modem link and share a single internet connection can make the best use of Dnsmasq.

Dnsmasq is included in most of the opensource firewalls and opensource router firmware and in the most common Linux distributions. Some of them include:

Opensource Firewalls:

IPCop / Smoothwall / floppyfw / Firebox / LEAF / m0n0wall / PfSense / Endian Firewall / ClarkConnect

Opensource router firmware:

dd-wrt / openwrt / stock firmware / fli4l

Linux Distributions:

Debian / Gentoo / Slackware / Suse / Fedora / Coyote Linux

*BSD

FreeBSD / OpenBSD / NetBSD

Some of the highlighting features of Dnsmasq are as follows:

• Automatically update the Public DNS Servers through PPP or DHCP connections. So, change in a Public DNS server of an ISP that the network is connected to will be picked up by Dnsmasq
• Caching Nameserver to reduce network traffic and improve performance
• Forwarding to Private DNS servers for specific Domains can be configured
• Nameservice for the localhosts using the /etc/hosts file and for DHCP Client hosts
• Static and Dynamic client leases on DHCP
• Multiple Network and IP Ranges on the DHCP server
• BOOTP support for network booting using a secure read-only TFTP server
• Simple global configuration using the /etc/dnsmasq.conf file
• Supports BOOTP and DHCP Relays
• Caches A records for IPv4 and AAAA records for IPv6 and PTR records
• Supports IPv4 and IPv6 protocols and even can act as a IPv4 toIPv6 and IPv6 to IPv4 forwarder
• Support MX records and SRV records for local machines
• Block DNS redirect websites (like some websites which forward to a link for a website that doesn't exist)

Dnsmasq does the name lookup from its /etc/hosts file and hence its all about maintaining a /etc/hosts file on one computer as against multiple PCs on the LAN. If the host is a DHCP client then even if there isn't an entry for the host in the "hosts" file it can still provide name resolution for the host.

Effectively, all hosts in the LAN will have the dnsmasq server as the nameserver in /etc/resolv.conf file (In windows under network connection) and you dont have to worry about the "hosts" file on the local system.

The /etc/hosts file on the Dnsmasq server can have only the hostname without the domain name (example: host1 instead of host1.mynetwork.com) as the domain name can be appended globally using configurations in the /etc/dnsmasq.conf file.

It's got .deb and rpm packages for Debian, Fedora and other distributions and also can be built from the Source files. For more information and download, click here for dnsmasq home page.

A DHCP server is the one which provides a network client with a unique IP address, Subnet mask, Gateway and DNS server IP address automatically when it connects to the network.

A DHCP Relay Agent is a computer, server or a Router in a particular subnet which receives a DHCP client broadcast and relays it to a DHCP server in another network or a subnet. A DHCP Relay Agent is more a helper agent here that gets the client a DHCP lease.

Lets say there are multiple subnets in your network with DHCP clients in all being seperated and routed through a router or a firewall and that not every subnet has a DHCP server and the organisation has just one or few centralised DHCP servers.

Given that the routers do not forward IP broadcast messages from one network to another, the only way that the clients get their leases are

1. One DHCP server in each subnet where there DCHP client exist

or

2. Use a DHCP Relay Agent which can receive and relay BOOTP and DHCP Client broadcast messages.

Most of the routers and Firewalls these days do have support for DHCP Relay Agents. In the event that you are the unfortunate one whose networks are routed using a router not supporting a DHCP Relay Agent then you can choose to use the DHCP Relay Agent support in Windows Server 2000 or 2003 or a Linux server.

DHCP Relay Agent in Cisco Routers

Cisco Routers support DHCP Relay Agents with ip helper-address command. To enable the  ip helper-address on an interface that will receive client BOOTP/DHCP broadcasts.

From the Global configuration mode,

Router(config)# interface fa 0/0

Router(config-if)# ip helper-addres 10.10.10.1

Router(config-if)# ip helper-addres 10.10.10.2

NOTE: 10.10.10.1 & 10.10.10.2 are the IP Address of the DHCP server

This will relay all DHCP broadcast messages received on interface FastEthernet 0/0 to the DHCP server 10.10.10.1

If there are more than one DHCP servers then use one helper-address for each DHCP server as above.

Windows Server 2000 and 2003

To setup a DHCP Relay agent in Windows Server 2000 or 2003 install the DHCP relay agent,

NOTE: DHCP Relay Agent cannot be installed on a server which already is running DHCP server

1. Launch Routing And Remote Access Service [RRAS] console.
2. Open IP Routing, right-click General, and select New Routing Protocol.
3. Select DHCP Relay Agent and click OK.

This will install the DHCP Relay Agent.

To configure,

From the RRAS console,

1. Right-clilck DHCP Relay Agent under IP Routing and select properties
2. Enter the IP Address of the DHCP server and click Add and OK.
3. On the right pane, check if the Network Interface for which the DHCP Relay Agent is required is enabled.
4. If not found, right-click DHCP Relay Agent and click new interface and add the interface. 

This should help.