For private cloud computing environment, we need to make sure that infinite computing resources are available on demand, however in the current architectures like Eucalyptus, there is a single server or Cluster Controller (CC) which is the sole provider of virtual machines to the users. Despite being an extremely powerful machine it has the constraint of finite resources for launching Virtual Machine (VM) instances. This paper describes a novel diffused cloud approach based on master-slave concept where one master and multiple slaves serve the resources to the clients. This architecture allows new clients to request virtual machines, and the server makes the choice of running the requested virtual machine either on previously available slaves, or on the clients who are recently registered into a set of slaves. This approach provides the functionalities such as launching VM instance on slaves, allows registration and deregistration of client and relocation of VM instances. We have also implemented a prototype in KVM (Kernel-based Virtual Machine) environment and have provided experimental data for performance evaluation. The experimental results show that though the load on the system increases, it never results in a bottleneck. © 2012 IEEE.