Like most non-Bluetooth wireless keyboards Microsoft's product uses the 27MHz radio spectrum.
"Dreamlab Technologies successfully cracked the encryption key used in Microsoft's Wireless Optical Desktop 1000/2000 keyboards," said the company.
"As most products in Microsoft's Wireless Desktop range are based on the same technology, Dreamlab does not consider them to be secure either."
The team found that the wireless signal could be picked up from a range of 10 metres using a simple radio receiver, a soundcard and suitable software. The signal can be picked up from further away using specialist aerials.
The signal between the keyboard and the computer is encrypted, but uses such weak encryption as to be effectively useless.
Full details of the hack have not been released as the encryption levels would take time to change and Dreamlab does not release exploits without making a fix available first.
The team said that only Microsoft keyboards have been tested so far, but that it expected products from Logitech and other companies to suffer the same problem. Manufacturers have been notified.
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