TrueCrypt is open source software for on-the-fly encryption. TrueCrypt can use an encrypted file or partition and mount it for use transparently by any application. The Windows version has a fancy GUI, but on Linux there is a good command line interface.
TrueCrypt provides a Deb package for Ubuntu on their web site. They have packages for Feisty, Edgy, and for 64-bit systems.
Once you have installed TrueCrypt, you are ready to create an encrypted volume. Run the following command in a terminal and TrueCrypt will walk you through creating a new encrypted volume. You can read about the various encryption and hash algorithms in the documentation.
Don’t loose you password, because there is no way around the encryption that TrueCrypt uses to store the data. To mount and decrypt the volume, run this command and enter the password:
truecrypt -u volume mountpoint
In my case, I run this to mount my cryptovault file to the vault directory in my home folder:
truecrypt -u /home/tom/cryptovault /home/tom/vault
Note that when you log off, TrueCrypt does not dismount encrypted volumes for you. So when you are done, run this command to dismount all TrueCrypt volumes:
There is a lot more you can do with TrueCrypt. I would recommend checking out the examples section of TrueCrypt’s man page for more detail on what you can do.