The most secure way of protecting data is to not transfer it at all. Is there a way you can avoid passing the password, at least? If it were me, I'd encrypt the username then pass only that data instead of the user/pass combo.
As far as encryption goes, it's scaleable depeding on how secure you want to make it. If you just want a light encryption that's very easy, but not incredibly secure, you should explore
MIME::Base64. Technically, it's an encoding and not a true encryption, but I think it's good enough to keep the most unsophisticated snoopers (aka average web users) at bay. At the very least, they can't just type in random plain-text usernames to see if they get lucky.
If you want more than this super-basic method, then you'll need to follow the links in the other replies.
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