Finally MuscleNerd, a member of iPhone Dev Team has confirmed that he has acheived untethered jailbreak on the latest iOS 4.2.1. He further explains that this method uses the saved SHSH blobs from Cydia servers to get the untethered jailbreak.
It is a backup plan because Comex is working on a more extensible method, but this one is also generalizable. Watch the video of jailbreaked iPod Touch on iOS 4.2.1 after the break.
Here are the latest updates from MuscleNerd’s twitter account:
Got “backup plan” for untethered 4.2.1 JB working (video coming up). Uses mysterious 4.2b3 hashes Cydia kept for you
(It’s a “backup plan” because comex is working on a more extensible one, but this method is also generalizable)
ipt4g 4.2.1 untethered JB w/4.2b3 kernel: http://is.gd/inE4e … Wastes no exploits, but upcoming @comex JB maybe better
Nothing is said about the release of this new method. However, if you want to get tethered jailbreak for your device running on iOS 4.2.1, you can use Redsn0w 0.9.6b6. As Redsn0w performs a tethered jailbreak, so you will have to connect your iPhone to PC and run Redsn0w after every reboot to get the jailbroken state.