(taken from: Linode guide to Limiting Access with SFTP Jails on Debian and Ubuntu

As the system administrator for your Linode, you may want to give your users the ability to securely upload files to your server. The most common way to do this is to allow file transfers via Secure File Transfer Protocol (SFTP), which uses SSH to provide encryption. This requires that you give your users SSH logins. However, by default SSH users are able to view your Linode’s entire filesystem, which may not be desirable.

This guide will help you configure OpenSSH to restrict users to their home directories, and to SFTP access only. Please note that these instructions are not intended to support shell logins; any user accounts modified in accordance with this guide will have the ability to transfer files, but not the ability to log into a remote shell session.

These instructions will work for Ubuntu 9.04, Debian 5, and later. Unfortunately, the version of SSH packaged with Ubuntu 8.04 is too old to support this configuration.

Configure OpenSSH

1. Edit your /etc/ssh/sshd_config file with your favorite text editor:

   vim /etc/ssh/sshd_config
   

2. Add or modify the Subsystem sftp line to look like the following:

   /etc/ssh/sshd_config

   1	Subsystem sftp internal-sftp

3. Add this block of settings to the end of the file:

   /etc/ssh/sshd_config

   1 2 3 4 5

   Match Group filetransfer ChrootDirectory %h X11Forwarding no AllowTcpForwarding no ForceCommand internal-sftp

   Save the changes to your file.

4. Restart OpenSSH:

   service ssh restart
   

   OpenSSH has been successfully modified.

Modify User Accounts

This section will set up the correct groups, ownership, and permissions for your user accounts.

1. Create a system group for users whom you want to restrict to SFTP access:

   addgroup --system filetransfer
   

2. Modify the user accounts that you wish to restrict to SFTP. Issue the following commands for each account, substituting the appropriate username. Please keep in mind that this will prevent these users from being able to log into a remote shell session.

   usermod -G filetransfer username
   chown root:root /home/username
   chmod 755 /home/username
   

   These users will now be unable to create files in their home directories, since these directories are owned by the root user.

3. Next, you need to create new directories for each user, to which they will have full access. Issue the following commands for each user, changing the directories created to suit your needs:

   cd /home/username
   mkdir docs public_html
   chown username:filetransfer *
   

   Your users should now be able to log into their accounts via SFTP and transfer files to and from their assigned subdirectories, but they shouldn’t be able to see the rest of your Linode’s filesystem.

Use SFTP

1. Use sftp from the terminal:

   sftp username@<Your_Linodes_IP>
   

   You can use the help command to see what commands you have access too within the SFTP shell. You have the ability to pwd, cd and ls, for instance. There are also commands like lpwd, that will print the local working directory. In the local home directory type touch test.txt

2. Transfer local files to the remote system:

   cd docs
   put test.txt
   

3. Transfer files to the local system from the remote system:

   get test.txt
   

4. You can test the file permissions by navigating to a different directory within the SFTP shell, and trying to transfer a file.

   sftp> put test.txt /tmp/
   Uploading test.txt to /tmp/
   remote open("/tmp/"): Failure
   

5. Exit the session with the exit command.