Installation method for Moodle 2.5 and higher versions only

As of Moodle version 2.5, the plugin can be deployed from within Moodle, by uploading the cloze editor ZIP file (see http://docs.moodle.org/25/en/Installing_add-ons#Installing_via_uploaded_ZIP_file).

Download the cloze editor ZIP-package from the Moodle plugins database
In your Moodle "Site Administration" menu, go to "Plugins/Install add-ons"
Look for the "Install add-on from ZIP file" section
Select "TinyMCE HTML editor / tinymce (tinymce)" as "Plugin type"
Drag and drop (or choose location and upload to server) the "clozeeditor.zip" file inside the ZIP package area
Tick the acknowledgement statement check box
At the add-on package validation, if everything is OK, click on the "Install add-on!" button
If the screen goes blank and the installation pauses, hit the "Update screen" key (F5) as many times (about 5) as needed
At the Plugins check window, click on the "Upgrade Moodle database now" button
At the Final window showing Success, click on the "Continue" button


Installation method for Moodle 2.4 (and alternative method for higher versions)

Unzip
Copy the contents of the directory to the directory lib/editor/tinymce/plugins on your Moodle installation, keeping the directory structure.
Visit ' Administration > Site Administration > Notifications '
Finish the installation process by clicking on the 'Upgrade Moodle database now' button.

If you have Moodle 2.7 or higher, aAfter successfully installing the add-on, you must go to ' Administration > Site administration > Plugins > Text editors > Manage editors '
You will see Moodle's available text editors:

The Atto editor is now the default text editor for Moodle 2.7+. It is small, but has no CLOZE support

You must move up the TinyMCE editor

You will now use TinyMCE as your default Text editor