UK Government Wants a Backdoor Into Windows
REBloomfield writes "The BBC is reporting that the British Government is working with Microsoft in order to gain backdoor access to hard drives encrypted by the forthcoming Windows Vista file system. Professor Anderson, professor of security engineering at Cambridge University, urged the Government to contact Microsoft over fears that evidence could be lost by suspects claiming to have forgotten their encryption key."
It's worth noting that harm can come not only from data being revealed under coercion, but also from data becoming unavailable.
If terrorists or an oppressive government take your computer and hard drives away, anyone who depends on that data is very much out of luck.
For this reason, local encrypted filestores and plausible deniability are only part of the puzzle. Quite a lot more is required, in particular cryptographic online distribution.
A comprehensive solution will need to use a large population of fixed size raw dataspaces spread across the net, instead of local disks. Quite likely, it would be stored steganographically 1:<large-N>:1 so that (for example) changing webcam images could be used as repositories. And it will need cryptographically-random access for site selection and dataspace selection and to individual bits in the dataspaces. And it'll need huge redundancy since the online storage will be inherently unreliable, yet without laying the scheme open to pretty simple differential cryptoanalysis.
That's a very tall order.