I am behind a proxy server in my college. It uses a simple username and password authentication. And i connect to the proxy server to port 3128. now i want to telnet simply to say any website on the internet like

$ telnet www.google.com 80

this gives me

error telnet: could not resolve www.udacity.com/80: Name or service not known

How can I define the proxy settings for telnet? I have already set environment variables http_proxyand HTTP_PROXY. Also have applied system wide proxy.

You can use Proxychains for this.

First install proxychains, using the command:

$ apt-get install proxychains

Then configure your proxy settings in /etc/proxychains.conf file.

Add at last, these lines for HTTP and HTTPS proxy.

http    proxy-ip   proxy-port    username        password
https   proxy-ip   proxy-port    username        password

Now you can do telnet by using the following command:

$ proxychains telnet www.google.com 80

You could do what the browser does, i.e. connect to the proxy,
$ telnet proxy-server 3128
and talk to it. If there was no authentication, a simple GET request (followed by two newlines (Enter)) with a full hostname and protocol, e.g.
GET http://www.google.com/ HTTP/1.1
should suffice. Since you need authentication, you need to provide your username and password base64-encoded in a Proxy-Authentication header, e.g.
GET http://www.google.com/ HTTP/1.1
Proxy-Authorization: Basic dXNlcm5hbWU6cGFzc3dvcmQ=
To create the base64 string, you could use echo -n username:password | openssl base64