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Is it possible to exclude individual users from connecting via SSH? I'd like to have a list of users that are allowed to connect and a list of those that are not. Can it be done? If so, how?

Of course.

You may want to exclude/include users/services with

/etc/hosts.deny /etc/hosts.allow

Is there a way to do that without requiring the SSH client system to be running identd? I wouldn't place any trust into information generated by remote systems.. I believe you can configure the allowed users in sshd's configuration file itself, though. Check the keywords AllowGroups, AllowUsers, DenyGroups and DenyUsers. HTH Tobias