Password authentication

Hi all,
    How to set up authentication such that user can log into database by
supplying the user name and password specified when the user is added to
databse.(Like Oracle). Password should be encrypted on transmission.
    I have an application which connects through JDBC. The database name is
test username is testuser and a password was specified at the time of
creating the user. I want to use this user and password for logging in to
application through JDBC and psql. Users connect to psql from their
machine(Some use Linux and some use Windows) or log into server using ssh
and connects locally. All these users must supply password for connecting to
test database. Everyone in internet is allowed to connect(must know
password).
     Please specify the line which will enable me to do this.

Thanks in advance

rgds
Anto Paul