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Now that File Vault 2 can encrypt the entire disk and encrypt external drives, can I have a fully encrypted Time Machine volume?

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up vote 7 down vote accepted

According to the Lion features page, encrypted backups are supported.

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Use the Time Machine pane of System Preferences to enable encryption for the volume. –  Graham Perrin Aug 4 '11 at 13:26
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Daniel Jalkut's blog today has a post that may be what you're looking for.

http://www.red-sweater.com/blog/1935/lions-whole-disk-encryption

Apparently, this:

% diskutil cs convert /Volumes/Data -passphrase [yourPasswordHere]

I haven't tried this yet, I just got Lion installed about an hour ago. Any destruction of your system is on your own head.

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