An Apple programmer, apparently by accident, left a debug flag in the most recent version of the Mac OS X operating system. In specific configurations, applying OS X Lion update 10.7.3 turns on a system-wide debug log file that contains the login passwords of every user who has logged in since the update was applied. The passwords are stored in clear text.
The security flaw only applies to users who used FileVault prior to upgrading to OS X Lion and did not switch to FileVault 2.
David Emery, the security researcher who made the discovery, says:
"This is worse than it seems, since the log in question can also be read by booting the machine into firewire disk mode and reading it by opening the drive as a disk or by booting the new-with-LION recovery partition and using the available superuser shell to mount the main file system partition and read the file. This would allow someone to break into encrypted partitions on machines they did not have any idea of any login passwords for. "
Mac OS X version 10.7.3 was released on February 1, 2012 and the flaw was reported shortly after on Apple's Support Communities; however, it hasn't been fixed yet. ZDNET has also contacted Apple directly requesting an update.