1. Configure Apache2 to enable virtual hosts.

Open php.ini to edit:

$ sudo gedit /etc/php5/apache2/php.ini

Make sure memory_limit is set to at least 128 MB (check with the Drupal requirements if you're not sure). Save the file.

Enable Apache rewrite engine by running this command:

$ sudo a2enmod rewrite

Now you need to restart Apache to activate the new configuration:

$ sudo /etc/init.d/apache2 restart

You might be getting this warning from Apache regarding the domain name:

It's not critical, but you can easily fix it by creating the file called "servername" in the /etc/apache2/conf.d directory. Then add this line

ServerName <your hostname>

2. Create a new webhost

Instead of the default Apache web directory, you can keep your websites in your home directory for convenience.

Change to your home directory ("$ cd ~") and create the new directory where you'll be keeping your websites, for example, "drupalsites":

$mkdir drupalsites

Go to this directory.

Download the latest version of Drupal in this directory and untar it (either in the browser or using "wget" command - see the instructions on Drupal.org). Now you'll get a new directory with the latest drupal version in its name (for example, drupal-6.19). You can keep it the way it is or change it to something else.

Create a new hostname for this website in the /etc/hosts:

$ gksudo gedit /etc/hosts

Add a line for your website, such as:

127.0.0.1 drupal616

Close and let's create a new apache virtual host. Change to sites-available and create a new file using this hostname:

$ cd /etc/apache2/sites-available

$ gksudo gedit drupal616

It should similar to the screenshot (replace hostname and Document root with your own):

Add the website to sites-enabled:

$sudo a2ensite drupal616

Restart Apache. Now the website should be available at the url "http://drupal616".

3. Create a new MySQL database and user in phpMyAdmin. 

Open phpMyAdmin (http://localhost/phpmyadmin). Go to Privileges and then "Add a new user".

Choose localhost and enter the name and password. You can create the database with the same name and grant all privileges to this user.

4. Install a new Drupal Website

Go back to your new Drupal site and install it. If you've installed Drupal before, it should all be familiar.

To create a new settings file, you can use this command after you change to "sites/default":

$ cp default.settings.php settings.php

To change permissions:

$ chmod 777 settings.php

To create the files directory:

$ mkdir files

$ chmod 777 files

Then enter the database name and username and proceed with the installation.

When you've finished installation, change back permission on settings.php:

$ chmod 644 settings.php