To do this you will need;
A jailbroken 1.1.2 iPod
BSD Subsystem 1.5 or greater
Installer 3.0b10 or later
At least 160 MB free space.
1. Add ipodtouchmaster.com/files/repo.xml to your installer sources list
2.Navigate to 1.1.3 jailbreak+iPhone Apps
3. Install the 1.1.3 Jailbreak
4. Wait (at on time it will look like it is frozen for up to an hour but it is not)
5.Your iPod will restart a couple of times
6. Enjoy your new 1.1.3 Jailbroken iPod
(if needed)7. If your iPod goes into recovery mode when you reboot it then download iBrickr 0.91 and boot it out of recovery
NOTES: This may take up to an 2 hours to complete. Do Not Switch off your iPod or it will be requiring a restore.
All thanks go to iPod Elite Team (ipodtouchmaster,ipodtouchhacker,Chris Stroud) and the Dev Team for developing the jailbreak.
Tutorial by Aaron / A33A