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We have developed a system for quantum key distribution (QKD), based on standard telecommunication lasers, detectors, and optical fiber, that passively compensates for time-dependent variations of the fiber-optic path due to stress, temperature changes, or birefringence. This approach allows information encoded in phase shifts imposed on single-photon-level pulses to be accurately read out after transmission over many kilometers of uncontrolled fiber. Cooled InGaAs avalanche photodiodes, pulse-biased using a special noise canceling circuit, are used to detect single 1.31-/spl mu/m infrared photons with a high efficiency, low dark-count rate, and subnanosecond time resolution. A single optical fiber carries both the quantum information and precise 1.55 /spl mu/m timing pulses between the two end stations. Overall synchronization of end-station activities, public discussion of basis choices, error correction, and privacy amplification have all been implemented over a local area network (LAN). The system at present generates raw, error-corrected, and privacy-amplified key data at rates of /spl sim/1000, 600, and 200 bits/s, respectively, over a 10-km single-mode fiber link.