To make .htaccess files work as expected, you need to edit /etc/apache2/sites-available/default. Look for a section that looks like this:

        <Directory /var/www/>
                Options Indexes FollowSymLinks MultiViews
                AllowOverride None
                Order allow,deny
                allow from all
                # Uncomment this directive is you want to see apache2's
                # default start page (in /apache2-default) when you go to /
                #RedirectMatch ^/$ /apache2-default/
        </Directory>

You need to modify the line containing AllowOverride None to read AllowOverride All. This tells Apache that it’s okay to allow.htaccess files to over-ride previous directives. You must reload Apache before this change will have an effect:

sudo /etc/init.d/apache2 reload