Here's how it is done.
1. On your laptop, pc or mac machine, go to http://hobbyistsoftware.com/vlcstreamer and choose the VLC helper software compatible to your device. In this case I have chosen Windows version.
2. Once downloaded and installed, you will see the icon of the software at the bottom right corner of your laptop
And if you click on it, server running should be ticked.
3. On your iphone, ipad or ipod download software called VLC streaming. Just search for "VLC streaming free" from itunes.
4. After initializing the software, it will ask you to enter your email
5. After pressing OK, you should be able to see your laptop which the VLC helper is running as a server.
6. Tap the device name and tap ADD A MOVIE
6. The VIDEOS directory from your computer will show and you can choose the folder and the movies within the folder to stream, in this case Johnny English!
This is the same file from my laptop
7. Then from your iphone, you need to determine the streaming properties of the movie, which in this case I've chosen low quality and resolution. Then press watch and then wait for the movie to start streaming!
8. After a while I am enjoying Johnny English on my iPhone!