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Windows 2000 includes support for Microsoft Challenge Handshake Authentication Protocol version 2 (MS-CHAP v2) that provides stronger security for remote access connections. MS-CHAP v2 offers the additional security features:

  • LAN Manager encoding of responses and password changes is no longer supported.

  • Two-way authentication verifies the identity of both sides of the connection. The remote access client authenticates against the remote access server and the remote access server authenticates against the remote access client. Two-way authentication, also known as mutual authentication, ensures that the remote access client is dialing into a remote access server that has access to the user's password. Mutual authentication provides protection against remote server impersonation.

  • Separate cryptographic keys are generated for transmitted and received data.

  • The cryptographic keys are based on the user's password and the arbitrary challenge string. Each time the user connects with the same password, a different cryptographic key is used.

The use of MS-CHAP v2 is negotiated during LCP negotiation by specifying the authentication protocol LCP option (type 3), the authentication protocol 0xC2-23, and the algorithm 0x81. Once LCP negotiation is complete, MS-CHAP messages use the PPP protocol ID of 0xC2-23.

MS-CHAP v2 authentication is an exchange of three messages:

  1. The remote access server sends an MS-CHAP v2 Challenge message to the remote access client that consists of a session identifier and an arbitrary challenge string.

  2. The remote access client sends an MS-CHAP v2 Response message that contains:

    • The user name.

    • An arbitrary peer challenge string.

    • An Secure Hash Algorithim (SHA) hash of the received challenge string, the peer challenge string, the session identifier, and the MD4-hashed version of the user's password.

  3. The remote access server checks the MS-CHAP v2 Response message from the client and sends back an MS-CHAP v2 Response message containing:

    • An indication of the success or failure of the connection attempt.

    • An authenticated response based on the sent challenge string, the peer challenge string, the client's encrypted response, and the user's password.

  4. The remote access client verifies the authentication response and if it is correct, uses the connection. If the authentication response is not correct, the remote access client terminates the connection.