There is a website ( https://koding.com ) which lets you create a linux virtual machine on their servers and just from your browser you can view your file system, create a file, open up terminal windows.....and more.
I was wandering if i could do something similar on my own server.
Or if there isn't one could you help me develop one.
Thanks in advance.
In essence you are talking about building your own private cloud with a self-serve portal. Others may have better suggestions on where to start but I'll go with having a read about Ubuntu's reference architecture just to understand how big these things can get and all the different components that go into them. Obviously what you want to achieve is somewhat simpler!
http://www.ubuntu.com/cloud/openstack/reference-architecture
...and then look here;
http://www.ubuntu.com/download/cloud/install-ubuntu-openstack
EDIT: Just to add this might also be a good starting place;
http://docs.openstack.org/developer/devstack/guides/single-machine.html
I've not done it myself but am now contemplating having a muck around with it.