(Dynamic Host Configuration Protocol) – This is a protocol that lets network administrators centrally manage and automate the assignment of IP Addresses on the corporate network. When a company sets up its computer users with a connection to the Internet , an IP address must be assigned to each machine. Without DHCP , the IP address must be entered manually at each computer . DHCP lets a network administrator supervise and distribute IP addresses from a central point and automatically sends a new IP address when a computer is plugged into a different place in the network.DHCP uses the concept of a ‘lease’ or amount of time that a given IP address will be valid for a computer. Using very short leases, DHCP can dynamically reconfigure networks in which there are more computers than there are available IP addresses.
 

DHCP's purpose is to enable individual computers on an IP network to extract their configurations from a server (the 'DHCP server') or servers, in particular, servers that have no exact information about the individual computers until they request the information. The overall purpose of this is to reduce the work necessary to administer a large IP network. The most significant piece of information distributed in this manner is the IP address.
 

DHCP was created by the Dynamic Host Configuration Working Group of the Internet Engineering Task Force (IETF; a volunteer organization which defines protocols for use on the Internet). As such, it's definition is recorded in an Internet RFC and the Internet Activities Board (IAB) is asserting its status as to Internet Standardization. As of this writing (June 1998), DHCP is an Internet Draft Standard Protocol and is Elective. BOOTP is an Internet Draft Standard Protocol and is Recommended. For more information on Internet standardization, see RFC2300 (May 1998)