Server identity can be verified by normal server-only auth between a
client and its server, but even that is not needed.
Right, mutual authentication seems to be the best way.

A client will know which domain its proxy is representing, and once
connected, it only provides credentials for that domain.

What do you mean by "connected"? And why should a UA only provide
credentials for one domain only?

I'm saying, when a phone registers or makes a call, it does so by
connecting to a SIP server, through a domain name or IP config or
whatever. THat server will have an associated credential. For any
request sent to that server, it should never provide a credential except
the one associated with it.

Your attack is possible only when the client sends credentials for a
domain, different than the one it is currently registered or placed the
call through in the first place.

And the SIP server which relays the INVITE from the attacker to the victim has to drop (?) the challenge if it receives such from the attacker (at least if the realm is identical to the one used by the server itself).

This is basically the same description which I provided already earlier.

The only open "issue" is then relaying of 407/401 replies from downstream elements by the proxy. I agree with Jonathan that I also do not believe that this actually a real world scenario. But mutual authentication in the challenge might help to solve this issue if people insist of keeping this scenario.

Regards
  Nils
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