http://www.msnbc.com/news/660096.asp?0si=-&cp1=1

...

       MAGIC LANTERN installs so-called keylogging software on a 
suspect's
machine that is capable of capturing keystrokes typed on a computer. By 
tracking
exactly what a suspect types, critical encryption key information can be
gathered, and then transmitted back to the FBI, according to the source, 
who
requested anonymity.
       The virus can be sent to the suspect via e-mail  perhaps sent 
for the
FBI by a trusted friend or relative. The FBI can also use common 
vulnerabilities
to break into a suspect's computer and insert Magic Lantern, the source 
said.
       Magic Lantern is one of a series of enhancements currently being
developed for the FBI's Carnivore project, the source said, under the 
umbrella
project name of Cyber Knight.

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