There are many versions of DTMF decoders outside the Internet, but all are doing pretty the same – decoding dual tone codes in to digits, that can be later interpreted by microcontroller. This device uses an integrated decoder chip MT8870DE which decodes all 16 DTMF tone pairs in to 4 bit code.
AVR Microcontroller reads these codes and outputs them to LCD as characters. DTMF receiver stores last 234 received digits in EEPROM that can be viewed by scrolling an LCD character line. DTMF Decoder also can be connected to PC via RS232 interface. So each time TDMF signal is received it sends digit to Terminal. Program is written by using free WinAVR GCC compiler tools. [via]
AVR DTMF decoder based on MT8870DE - [Link]