Index: wp-login.php
===================================================================
--- wp-login.php	(revision 6349)
+++ wp-login.php	(working copy)
@@ -184,9 +184,9 @@
 
 	// Generate something random for a password... md5'ing current time with a rand salt
 	$new_pass = substr( md5( uniqid( microtime() ) ), 0, 7);
-	$wpdb->query("UPDATE $wpdb->users SET user_pass = MD5('$new_pass'), user_activation_key = '' WHERE user_login = '$user->user_login'");
+	$new_hash = wp_hash_password($new_pass); 
+	$wpdb->query("UPDATE $wpdb->users SET user_pass = '$new_hash', user_activation_key = '' WHERE ID = '$user->ID'");
 	wp_cache_delete($user->ID, 'users');
-	wp_cache_delete($user->user_login, 'userlogins');
 	$message  = sprintf(__('Username: %s'), $user->user_login) . "\r\n";
 	$message .= sprintf(__('Password: %s'), $new_pass) . "\r\n";
 	$message .= get_option('siteurl') . "/wp-login.php\r\n";
Index: wp-includes/pluggable.php
===================================================================
--- wp-includes/pluggable.php	(revision 6349)
+++ wp-includes/pluggable.php	(working copy)
@@ -307,21 +307,32 @@
 	}
 
 	$login = get_userdatabylogin($username);
-	//$login = $wpdb->get_row("SELECT ID, user_login, user_pass FROM $wpdb->users WHERE user_login = '$username'");
 
-	if (!$login) {
+	if ( !$login || ($login->user_login != $username) ) {
 		$error = __('<strong>ERROR</strong>: Invalid username.');
 		return false;
+	}
+
+	// If the password is already_md5, it has been double hashed.
+	// Otherwise, it is plain text.
+	if ( !$already_md5 ) {
+		if ( wp_check_password($password, $login->user_pass) ) {
+			// If using old md5 password, rehash.
+			if ( strlen($login->user_pass) <= 32 ) {
+				$hash = wp_hash_password($password);
+				$wpdb->query("UPDATE $wpdb->users SET user_pass = '$hash', user_activation_key = '' WHERE ID = '$login->ID'");
+				wp_cache_delete($login->ID, 'users');
+			}
+
+			return true;
+		}
 	} else {
-		// If the password is already_md5, it has been double hashed.
-		// Otherwise, it is plain text.
-		if ( ($already_md5 && md5($login->user_pass) == $password) || ($login->user_login == $username && $login->user_pass == md5($password)) ) {
+		if ( md5($login->user_pass) == $password )
 			return true;
-		} else {
-			$error = __('<strong>ERROR</strong>: Incorrect password.');
-			return false;
-		}
 	}
+
+	$error = __('<strong>ERROR</strong>: Incorrect password.');
+	return false;
 }
 endif;
 
@@ -473,8 +484,10 @@
 
 if ( !function_exists('wp_setcookie') ) :
 function wp_setcookie($username, $password, $already_md5 = false, $home = '', $siteurl = '', $remember = false) {
-	if ( !$already_md5 )
-		$password = md5( md5($password) ); // Double hash the password in the cookie.
+	$user = get_userdatabylogin($username);
+	if ( !$already_md5) {
+		$password = md5($user->user_pass); // Double hash the password in the cookie.
+	}
 
 	if ( empty($home) )
 		$cookiepath = COOKIEPATH;
@@ -700,4 +713,37 @@
 }
 endif;
 
+if ( !function_exists('wp_hash_password') ) :
+function wp_hash_password($password) {
+	global $wp_hasher;
+
+	if ( empty($wp_hasher) ) {
+		require_once( ABSPATH . 'wp-includes/class-phpass.php');
+		// By default, use the portable hash from phpass
+		$wp_hasher = new PasswordHash(8, TRUE);
+	}
+	
+	return $wp_hasher->HashPassword($password); 
+}
+endif;
+
+if ( !function_exists('wp_check_password') ) :
+function wp_check_password($password, $hash) {
+	global $wp_hasher;
+
+	if ( strlen($hash) <= 32 )
+		return ( $hash == md5($password) );
+
+	// If the stored hash is longer than an MD5, presume the
+	// new style phpass portable hash.
+	if ( empty($wp_hasher) ) {
+		require_once( ABSPATH . 'wp-includes/class-phpass.php');
+		// By default, use the portable hash from phpass
+		$wp_hasher = new PasswordHash(8, TRUE);
+	}
+
+	return $wp_hasher->CheckPassword($password, $hash);
+}
+endif;
+
 ?>
Index: wp-includes/registration.php
===================================================================
--- wp-includes/registration.php	(revision 6349)
+++ wp-includes/registration.php	(working copy)
@@ -54,8 +54,8 @@
 		$update = true;
 	} else {
 		$update = false;
-		// Password is not hashed when creating new user.
-		$user_pass = md5($user_pass);
+		// Hash the password
+		$user_pass = wp_hash_password($user_pass);
 	}
 
 	$user_login = sanitize_user($user_login, true);
@@ -156,7 +156,7 @@
 	// If password is changing, hash it now.
 	if ( ! empty($userdata['user_pass']) ) {
 		$plaintext_pass = $userdata['user_pass'];
-		$userdata['user_pass'] = md5($userdata['user_pass']);
+		$userdata['user_pass'] = wp_hash_password($userdata['user_pass']);
 	}
 
 	// Merge old and new fields with new fields overwriting old ones.
@@ -207,4 +207,4 @@
 	return wp_create_user($username, $password, $email);
 }
 
-?>
\ No newline at end of file
+?>
Index: wp-includes/user.php
===================================================================
--- wp-includes/user.php	(revision 6349)
+++ wp-includes/user.php	(working copy)
@@ -16,8 +16,7 @@
 // TODO: xmlrpc only.  Maybe move to xmlrpc.php.
 function user_pass_ok($user_login,$user_pass) {
 	$userdata = get_userdatabylogin($user_login);
-
-	return (md5($user_pass) == $userdata->user_pass);
+	return wp_check_password($user_pass, $userdata->user_pass);
 }
 
 //