The problem can be corrected by upgrading the affected package to version 2.5.5-6ubuntu0.9 (for Ubuntu 4.10), or 2.5.8-3ubuntu1.2 (for Ubuntu 5.04). In general, a standard system upgrade is sufficient to effect the necessary changes.
It was discovered that Squid did not verify the validity of DNS server responses. When Squid is started, it opens a DNS client UDP port whose number is randomly assigned by the operating system. Unless your network firewall is configured to accept DNS responses only from known good nameservers, this vulnerability allowed users within the local network to inject arbitrary DNS responses into Squid ("DNS spoofing"). This could be used to present different web pages to users from those they actually requested.