Microsoft Office 2007 uses 128 bit AES for password encryption. In 2003, the US Government announced that the AES encryption algorithm may be used for classified information. This is specified in The National Policy on the use of the Advanced Encryption Standard (AES) to Protect National Security Systems and National Security Information (CNSSP-15).
CNSSP-15 states that AES with either
128 or 256-bit keys are sufficient to
protect classified information up to
the SECRET level. Protecting TOP
SECRET information would require the
use of 256-bit AES keys as well as
numerous other controls on
manufacture, handling and keying.
These same key sizes are suitable for
protecting both national security and
non-national security related
information throughout the US
Government.(www.nsa.gov, see also AES
Word 2007 by default uses AES 128 bit strong encryption. Also, if you open a document created in the older versions of office (2002, 2003) in Office 2007 with the default encryption mode, the old encryption algorithm will be replaced with the strong 128-bit encryption. It’s even possible to use 256-bit encryption.
This means that Office 2007 encryption can be used for top secret information as far as the encryption algorithm is concerned, but the password strength is just as important.
Please read the related article for more information.