Dirt is an open source project adding FiSH compatible chat encryption to any IRC client, it can be used as Socks4 proxy or bouncer. Dirt only allows localhost (127.0.0.1) connections, this is to make sure that encrypted text will not leak out of your machine, the listening port for Socks4 is 1088 and the 6666 port is used when acting as a bouncer, settings can be changed modifying “dirt.ini” with a text editor.
After installation you will notice a Dirt icon in your system tray, to use Dirt in mIRC, a popular Windows IRC chat client, you need to access Tools>Options>Connect>Firewall and enter the appropriate hostname (127.0.0.1) and port number. Once connected you can type /dirt to see a list of all possible commands,
For those not aware, FiSH is a widely available IRC plugin providing Blowfish encryption grade to IRC chat, you can find it in the Linux command line irssi IRC client and many others. If you use a Mac computer or Debian Linux you could try FiSHLiM, a plugin for FiSH IRC encryption working in XChat and HexChat IRC chat clients.
Dirt works in Windows, Linux and BSD but it is still in development, another alternative could be using psyBNC, an IRC bouncer that replaces your computer IP with a virtual host (vHost) and supports channel encryption with Blowfish and IDEA algorithm, you will need a shell account to manage psyBNC, there are many companies offering them at cut-prize with easy configuration instructions, they are normally used by channel administrators to handle abuse.