Make sure first that you install the Optware repositories so that you can install Lighttpd web server and the PHP interpreter

Install lightppd & php-fcgi packages

# ipkg-opt install lighttpd php-fcgi

Edit the lighttpd configuration file

Locate the file lighttpd.conf and edit it in /opt/etc/lighttpd. Make sure that you first make a backup copy.
Uncomment the line mod_fastcgi by removing the #.

server.port                = 8081
server.modules              = (
                                "mod_access",
                                "mod_fastcgi",
                                "mod_accesslog" )

Your done. The php-cgi configuration file is picked up automatically from the conf.d sub-directory, so no further changes are necessary.
To pick up the new configuration just execute /opt/etc/init.d/S80lighttpd restart

Startup

If you want the web server to start automatically at boot time do the following:

cp /opt/etc/init.d/S80lighttpd /etc/init.d
ln -s /etc/rc3.d/S80lighttpd /etc/init.d/S80lighttpd

Testing

For testing point your browser to the Slug Address and port 8081:
http://slugos:8081
You should get a Welcome page.

Testing PHP

Create a file named info.php in /opt/share/www
The file content should be the following:

<?php
  phpinfo();
?>

Point your browser to http://slugos:8081/info.php. You should get the PHP status/configuration web page.

Further information

WebServer HowTo