From ModMyi - Wiki

This is a simple tutorial which will teach you how to block ads in Mobile Safari on your jailbroken iPhone/ iPod Touch.

Why block ads?

Downloading ads makes the surfing on your device slower, so if somehow you can block ads, the web browsing will be much more faster!

Here are the steps you need to follow:

1. First of all, download the replacement hosts file from here.

2. Extract the zip file downloaded above to get file named hosts.

3. SSH into your iPhone. On a Mac, you can use Cyberduck or Fugu and. PC users can use WinSCP.

4. Browse to /etc directory on the phone.

5. Rename the file hosts in the /etc directory on your phone to hosts.bak and send the new hosts file you downloaded above to the /etc directory.

Image:Ad3.jpg

6. Now you can enjoy faster browsing!

Before:

After:

If you need to add any additional ad server, open the hosts file and add a line 127.0.0.1 www.adsite.com along with the other blocked ones.

Note: If you want to reverse the above for some reason, just delete the new file from /etc directory on your phone and rename hosts.bak to hosts.

You need to repeat the above procedure to block ads everytime you upgrade.

All the credit for this solution goes to James @ jamesisbored