Do you have Photoshop?
If so just apply the type layer as a vector mask on your image.

If you'd like me to explain in more detail I'd be happy to do so, just let me know.

There are a lot of ways one is mask as Liquid sky said but you don't need to do a vector mask it depends on the effect but i think that the portrait can be seen inside the letters using letters as mask.
Other way could be using the blend of the layer, layer of text on top of the photo and then see the blend options like "screen" and so.
The easier ways to do that are on Photoshop.

Joel Santos // youremin
sound & visual

hmmm i don't like the blending effect...
I always admired the ones where the designer
uses the different weights of a font to build
the image...yes it will take a while but it will
look better.

Yes agostini i do prefer too! i would even do it on illustrator or something but i don't know the experience that vanina has with the software!
Joel Santos // youremin
sound & visual

Well, here is how I would do it:

— Create a new image in Photoshop with a white background and drag in the picture to which you want to apply the effect.

— Duplicate the layer containing your chosen picture and set the opacity of the bottom one to about 10%

— Create a layer of text that covers your subject matter, filling it with whatever text you please.

— Right-click (or control-click) on the text layer in the Layers Palette and select "Create Work Path".

— Select the top picture layer (the one at 100% opacity) and then go to the menu bar and choose Layer>Vector Mask>Current Path

— Hide the text layer by clicking the little eye next to the "T" in the Layers Palette and you're done! (Just click on the background layer to get rid of the outline of the vector mask)

have a look at vectoraster...
not quite the same if you want reading text but
you get some nice effects out of it...
http://www.lostminds.com/content/list_screenshots.php?product=Vectoraster

http://www.mediabistro.com/galleycat/original/NPM_2007_poster.pdf
(A typographic portrait of Walt Whitman, by Christoph Niemann.)

http://www.flickr.com/photos/typeoff/2203773212/in/photostream/
(It's tiny, but there is a typographic portrait of Pablo Picasso that ran in U&lc magazine.)

THANK YOU THANK YOU THANK YOU! I'll do this in about a week and report. Thanks so much for all your wonderful suggestions. You saved me hours worth of research.

A typophile member made a tool for doing this kind of stuff a couple of months ago here

Give that a go (though it's just for Windows)

-Rafe

Nice node that one... that should be for mac

Joel Santos // youremin
sound & visual

Like someone said there can be many ways to develop such ASCII portraits. Depends on what kind of results you want.

Method one:
http://asciiconvert.com/
http://www.ascii-art-generator.com/
http://www.altarsoft.com/ascii_art_maker.shtml
http://www.network-science.de/ascii/

Method two:
Use Illustrator's spray tool and experiment.

Method three:
I guess this is how the sample image you have posted was been produced.

Create two layers in the the Photoshop. The top layer should be the text layer and the bottom one should have the image you want to apply the effect. Make sure that your text is set either in white or Black. Now select the top(text) layer and keep playing with the various layers/transperency modes. Shortcut for this: "Shift" + "+".

really interesting links satya really...

Joel Santos // youremin
sound & visual

I made something like this once before.

http://designrelated.com/portfolio/darintenb/page/1/entry/8375

All I did was put all the text in a layer in Photoshop with the original photo in another layer. Right click on the layer with the text and click select pixels. Then invert the selection and change to the layer with the photo. Hit delete and all the pixels that aren't the text will be erased leaving only the portions of the photo where there was text. Hide the original text layer and presto, you've got what I did.

yes that may be a solution to.

Joel Santos // youremin
sound & visual