http://secunia.com/advisories/23445/ 

Description:
Some vulnerabilities have been reported in Sun Java JRE (Java Runtime Environment), which can be exploited by malicious people to compromise a user's system.

1) Two errors exist in the Java Runtime Environment, which can be exploited by malicious, untrusted applets to read and write local files, or to execute local applications.

2) Two errors related to serialisation exist in the Java Runtime Environment, which can be exploited by a malicious, untrusted applet to elevate it's privileges.

The following releases are affected:
* JDK and JRE 5.0 Update 7 and prior
* SDK and JRE 1.4.2_12 and prior
* SDK and JRE 1.3.1_18 and prior (not affected by vulnerability #2)

Secunia has constructed the Secunia Software Inspector, which you can use to check if your system is vulnerable:
http://secunia.com/software_inspector/

Solution:
Update to fixed versions:

JDK and JRE 5.0:
Update to JDK and JRE 5.0 Update 8 or later.
http://java.sun.com/javase/downloads/index_jdk5.jsp

SDK and JRE 1.4.x:
Update to SDK and JRE 1.4.2_13 or later.
http://java.sun.com/j2se/1.4.2/download.html

SDK and JRE 1.3.x:
Update to SDK and JRE 1.3.1_19 or later.
http://java.sun.com/j2se/1.3/download.html