DHCP(Dynamic Host Configuration Prototcol).
It dynamically assigns IP addresses to the hosts in the network.
DHCP follows 4 steps for assigning IP address to the hosts.
1) Discover: The host searches for the DHCP device in the network and requests for IP address.
2) Offer: DHCP offers list of IPs to host for selection.
3) Reply: The host reply(request) to DHCP with the IP address which it likes to use.
4) Acknowledge: The DHCP checks whether the requested IP is available or not. If it is available , it assigns the IP to the host else it requests the host to choose another IP.