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Create dev.domain.tld site in hosting control panel.
Create the database and user.
Copy over the database and files.
Update the database and user info in "includes/configure.php" and "admin/includes/configure.php".
Also update the file paths in the configure.php files.
Update the links to point to the development site:
$ for x in `grep -r www.domain.tld * -l` ; do perl -pi \
-e 's/www\.domain\.tld/dev\.domain\.tld/g' $x ; done
Change ownership of files as required.
Login in as admin and change the cache location.