I've installed atftpd, and configured it as follows:

boban@netmonitor:~$ cat /etc/default/atftpd
USE_INETD=false
OPTIONS="--tftpd-timeout 300 --retry-timeout 5 --mcast-port 1758 --mcast-addr 239.239.239.0-255 --mcast-ttl 1 --maxthread 100 --verbose=9 /tftp/"

boban@netmonitor:~$ ls -ld /tftp/
drwxrwxrwx 2 nobody root 4096 2012-01-16 13:06 /tftp/


boban@netmonitor:~$ ls -l /tftp/test.txt
-rw-rw-rw- 1 nobody root 12 2012-01-16 13:06 /tftp/test.txt

boban@netmonitor:~$ cat /etc/hosts.allow
in.tftpd: LOCAL, 192.168.150.66
atftpd: LOCAL, 192.168.150.66

boban@netmonitor:~$ tftp localhost
tftp> get test.txt
Received 12 bytes in 0.0 seconds

But, from other host, I'm getting:

boban@boban:~$ tftp 192.168.150.85
tftp> get test.txt
Transfer timed out.

Logs on tftp server shows:

Jan 16 15:20:40 netmonitor atftpd[13503]: Creating new socket: 192.168.150.85:37057
Jan 16 15:20:40 netmonitor atftpd[13503]: Serving test.txt to 192.168.150.66:35725
Jan 16 15:20:40 netmonitor atftpd[13503]: will do netascii convertion
Jan 16 15:20:40 netmonitor atftpd[13503]: recvmsg: Connection refused
Jan 16 15:20:40 netmonitor atftpd[13503]: tftpd_file.c: 926: recvfrom: Connection refused
Jan 16 15:20:40 netmonitor atftpd[13503]: Aborting transfer
Jan 16 15:20:40 netmonitor atftpd[13503]: Server thread exiting

There is no iptables filtering on both sides. Is there a way to solve this?

Try iptables --list or specifically allow the ports you want using UFW, and watch the ufw logs

Try installing iptraf and watch the network traffic.

I'm guessing that local host ( ie same machine loopback ) is okay, the ports across machines are blocked which they would be unless they are specifically allowed ( by you !).

Check if your config use 'force passive mode'. see http://slacksite.com/other/ftp.html
It means the server has to open two ports, the first port number is 21, the second is anywhere, you can set it in server settings. There is used a range (for example form 30000 to 40000 ). See your configs and allow that range for your FTP in your firewall.

The original question was about tftp, it looks like there is no passive mode at all. Do you want to use it to boot another machine by PXE or why you chose tftp?