Android added this functionality already, but for my target deployment I had to implement it from scratch . I usually end up doing that anyway. So the idea is to have a login form with username / password / login button and next to the password field you would have a small button that toggles password obfuscation on and off. It looks like this:

The implementation is trivial. You need to keep the current state so you can implement the toggle. This state can be anything, I used the transformation property of the password editbox and changed button / transformation against that. Here’s the code:

LinearLayout hl = new LinearLayout(this);
			hl.setOrientation(LinearLayout.HORIZONTAL);
			content.addView(hl);
			
			final EditText etp = new EditText(this);
			etp.setHint(R.string.hint_password);
			etp.setTransformationMethod(new PasswordTransformationMethod());
			hl.addView(etp, new LinearLayout.LayoutParams(LayoutParams.MATCH_PARENT, LayoutParams.WRAP_CONTENT, 1.0f));
			
			final ImageView iv = new ImageView(this);
			iv.setAdjustViewBounds(true);
			iv.setMaxHeight(100);
			iv.setImageResource(R.drawable.hide);
			hl.addView(iv);
			
			iv.setOnClickListener(new OnClickListener() {
				
				@Override
				public void onClick(View v) {
					if (etp.getTransformationMethod() == null) {
						iv.setImageResource(R.drawable.hide);
						etp.setTransformationMethod(new PasswordTransformationMethod());
					} else {
						iv.setImageResource(R.drawable.show);
						etp.setTransformationMethod(null);
					}
				}
			});

The right button (eye symbol) works as a toggle switch and will show / hide the password content. This is a very useful feature when entering passwords, to do a quick check before hitting that Login button and avoid any typos.