A flaw found in the encryption system used by the Netscape Navigator browser to protect email passwords could harm businesses using older versions of the browser, which are vulnerable to remote password theft.

The current 4.7 version of Navigator has plugged the security hole, but potential password decoders might still be able to read passwords if they have physical access to a machine.

Chris Saito, senior director for product management at Netscape, said the ability to save passwords on machines is offered as a convenience and users concerned about the strength of password encryption should physically secure their machines and enter their passwords each time they log on to their email.

According to Gary McGraw, chief technology officer at Reliable Software Technologies, engineers at his company needed just eight hours to break the algorithm used to secure Netscape mail passwords. He said engineers were writing a tool to look for information on keys and other sensitive material on the hard drive and tested it on the Netscape Windows Registry file, which stores password and other user information.

McGraw noted that if a malicious intruder accessed a Netscape mail password, they could reverse-engineer the algorithm, determine the password and maliciously spoof the individual's mail or gain access to other secured machines the individual accesses with the same password. "This could have a real impact on the manufacturers and the people deploying the software," McGraw said.

Saito said Netscape has no immediate plans to change the algorithm that protects the password and instead wants users to make sure they physically secure their machines. He said Netscape needs to do better education about its user interface. "The intention here is to prevent casual access to the password," said Saito of the algorithm. "It's not so much an issue about the algorithm, it's about physical security because someone has to get access to your machine."

Saito added that although the Netscape software allows users to save their passwords to the registry as a convenience, it isn't the default setting and users can disable the preference. He advised users to enter their password each time they access their email account and store the password in their head, not on their hard drive. "There are big companies that store information in the registry in plain text -- including passwords for other applications, not just ours," said Saito. "If it's confidential information, don't save the passwords."

Saito said Netscape is interested in eventually changing the password-protection algorithms. "We would be very interested in improving security overall, and this is one way of improving security in future versions of the product," Saito said.