I know of a few people who like to chat ‘off-the-record’ in GTalk. Why? Don’t ask me. But here is a plugin you can use to make sure you are REALLY off the record, irrespective of the chat protocol you use.
According to Wikipedia, Off-the-Record Messaging (OTR), is a cryptographic protocol that provides strong encryption for instant messaging conversations. OTR uses a combination of the AES symmetric-key algorithm, the Diffie-Hellman key exchange, and the SHA-1 hash function. In addition to authentication and encryption, OTR provides perfect forward secrecy and deniable encryption.
The primary motivation behind the protocol was providing deniability for the conversation participants while keeping conversations confidential, like a private conversation in real life, or off the record in journalism sourcing.
Off-the-Record (OTR) Messaging allows you to have private conversations over instant messaging by providing:
Encryption: No one else can read your instant messages.
Authentication: You are assured the correspondent is who you think it is.
Deniability: The messages you send do not have digital signatures that are checkable by a third party. Anyone can forge messages after a conversation to make them look like they came from you. However, during a conversation, your correspondent is assured the messages he sees are authentic and unmodified.
Perfect forward secrecy. If you lose control of your private keys, no previous conversation is compromised.
OTR will work with Gaim, Adium, Trillian and Pidgin. You can download it from http://www.cypherpunks.ca/otr/