Goertzel algorithm: http://en.wikipedia.org/wiki/Goertzel_algorithm

Idea from http://netwerkt.wordpress.com/2011/08/25/goertzel-filter/ and optimized for DTMF decoding.

'''
A python implementation of the Goertzel algorithm to decode DTMF tones.
The wave file is split into bins and each bin is analyzed
for all the DTMF frequencies. The method run() will return a numeric
representation of the DTMF tone.
'''
import wave
import struct
import math
class pygoertzel_dtmf:
    def __init__(self, samplerate):
        self.samplerate = samplerate
        self.goertzel_freq = [1209.0,1336.0,1477.0,1633.0,697.0,770.0,852.0,941.0]
        self.s_prev = {}
        self.s_prev2 = {}
        self.totalpower = {}
        self.N = {}
        self.coeff = {}
        # create goertzel parameters for each frequency so that
        # all the frequencies are analyzed in parallel
        for k in self.goertzel_freq:
            self.s_prev[k] = 0.0
            self.s_prev2[k] = 0.0
            self.totalpower[k] = 0.0
            self.N[k] = 0.0
            normalizedfreq = k / self.samplerate
            self.coeff[k] = 2.0*math.cos(2.0 * math.pi * normalizedfreq)
    def __get_number(self, freqs):
        hi = [1209.0,1336.0,1477.0,1633.0]
        lo = [697.0,770.0,852.0,941.0]
        # get hi freq
        hifreq = 0.0
        hifreq_v = 0.0
        for f in hi:
            if freqs[f]>hifreq_v:
                hifreq_v = freqs[f]
                hifreq = f
        # get lo freq
        lofreq = 0.0
        lofreq_v = 0.0
        for f in lo:
            if freqs[f]>lofreq_v:
                lofreq_v = freqs[f]
                lofreq = f
        if lofreq==697.0:
            if hifreq==1209.0:
                return "1"
            elif hifreq==1336.0:
                return "2"
            elif hifreq==1477.0:
                return "3"
            elif hifreq==1633.0:
                return "A"
        elif lofreq==770.0:
            if hifreq==1209.0:
                return "4"
            elif hifreq==1336.0:
                return "5"
            elif hifreq==1477.0:
                return "6"
            elif hifreq==1633.0:
                return "B"
        elif lofreq==852.0:
            if hifreq==1209.0:
                return "7"
            elif hifreq==1336.0:
                return "8"
            elif hifreq==1477.0:
                return "9"
            elif hifreq==1633.0:
                return "C"
        elif lofreq==941.0:
            if hifreq==1209.0:
                return "*"
            elif hifreq==1336.0:
                return "0"
            elif hifreq==1477.0:
                return "#"
            elif hifreq==1633.0:
                return "D"
    def run(self, sample):
        freqs = {}
        for freq in self.goertzel_freq:
            s = sample + (self.coeff[freq] * self.s_prev[freq]) - self.s_prev2[freq]
            self.s_prev2[freq] = self.s_prev[freq]
            self.s_prev[freq] = s
            self.N[freq]+=1
            power = (self.s_prev2[freq]*self.s_prev2[freq]) + (self.s_prev[freq]*self.s_prev[freq]) - (self.coeff[freq]*self.s_prev[freq]*self.s_prev2[freq])
            self.totalpower[freq]+=sample*sample
            if (self.totalpower[freq] == 0):
                self.totalpower[freq] = 1
            freqs[freq] = power / self.totalpower[freq] / self.N[freq]
        return self.__get_number(freqs)
if __name__ == '__main__':
    # load wav file
    wav = wave.open('dtmf.wav', 'r')
    (nchannels, sampwidth, framerate, nframes, comptype, compname) = wav.getparams()
    frames = wav.readframes(nframes * nchannels)
    # convert wave file to array of integers
    frames = struct.unpack_from("%dH" % nframes * nchannels, frames)
    # if stereo get left/right
    if nchannels == 2:
        left = [frames[i] for i in range(0,len(frames),2)]
        right = [frames[i] for i in range(1,len(frames),2)]
    else:
        left = frames
        right = left
    binsize = 400
    # Split the bin in 4 to average out errors due to noise
    binsize_split = 4
    prevvalue = ""
    prevcounter = 0
    for i in range(0,len(left)-binsize,binsize/binsize_split):
        goertzel = pygoertzel_dtmf(framerate)
        for j in left[i:i+binsize]:
            value = goertzel.run(j)
        if value==prevvalue:
            prevcounter+=1
            if prevcounter==10:
                print value
        else:
            prevcounter=0
            prevvalue=value

Test file with 50ms long DTMF tones separated by 10ms silence:
DTMF test tone

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