There are numerous "squirrel cams" on the internet. The following is my rendition.

I had access to all the things I needed - squirrels, tools, wood, web server, ... I looked around the web for design ideas, then set up the following.

And, it only took me two years to get around to publishing this entry. Hope you like it.

Step 1: Design

I settled on this design as it had the features that squirrels told me they liked ( I conducted a short focus group), and it provided a place for the web camera. The web camera was purchased on ebay for about $15. It is a small SOC USB web cam surrounded by six infrared LEDs. Camera and LEDs use USB for both power and communication.

I went with USB as it was cheap, simple, and quick. The biggest limitation is range. USB-2 has a range of 5 meters. I consider this build a "proof of concept". See future improvements section for alternate camera ideas. You can overcome the 5 meter USB limit with active USB cables or addition of a hub. ( or go with a non usb camera - a wifi enabled camera would be ideal )

Actual house dimensions are pretty flexible as well. My target for the house area was roughly 1'x1' and 18" tall. I used 11.5" pine shelving, and only cut pieces to length.

Tools used - I used all my power and air tools - table saw, nail gun, etc - but this build could easily be done with a hand saw, glue, screws, a drill, and a screwdriver.

Materials - wood $20, lexan $5, camera $15, software $30, screws and stuff were whatever I had around.

see additional information is in image notes in yellow boxes on the pictures.

Step 2: Software

For web cam software I went with is visionGS - I am sure there are other web cam applications that would work, but this one was affordable ( ~$30 for the full function copy - free for basic copy ) and had the features I wanted:
   Configurable motion detection and capture
   Options for alerting
   Archiving and automatic file management
   Built in streaming of live video

The web cam software runs on a pc and pushes captured images to the web server over the network. Streaming video requires a live connection to the capture PC.

The web server is an old pc running iis, with some custom aspx scripts for thumbnail generation and image archiving.

Step 3: Deployment

I mounted the whole arrangement on my house - side of house with no view , few windows, no traffic, and two story wall. some branches provide access to adjacent trees.

Last year the mom squirrel built a nest in the box so it was pretty difficult to see the babies.She kept them covered.It seemed to be temperature dependent, and the spring was quite cold, so it limited viewing opportunities.

I believe there were three baby squirrels.They moved out around the third week of April.It was quite sudden.They were there one day, and no sign of them after that.

Step 4: Improvements

The concept works, but there are opportunities for improvement.

1) It would be good to have better camera( resolution) and lens( focus) for higher resolution wide angle view with expanded depth of field. Most ccd cameras will work in IR spectrum, though some have IR filters that will need to be removed. ( point your remote control at your favorite digital camera... you will probably see the flashing light )
I considered cameras with pan and zoom, but figure the noise would disturb the occupants.

2) Internet connection that can support the opening up images and video feed beyond F&F.

3) second camera, outside the house, for real color shots during the day.

4) microphone for audio

5) Suggestions?