2005 NEC©®
406.3 General Installation Requirements.
(c) A nonÂgrounding-type receptacle(s) shall be permitted to be replaced with a grounding-type receptacle(s) where supplied through a ground-fault circuit interrupter.. Grounding-type receptacles supplied through the ground-fault circuit interrupter shall be marked "GFCI Protected" and "No Equipment Ground." An equipment grounding conductor shall not be connected between the grounding-type receptacles.

This is what the Code position is on the question. Whether this satisfies the inspector or perspective buyer is a different matter

I don't remember what brand it was, Cooper maybe - but I remember getting a little sticker with it that says no equipment ground that you could put on it if it was a 2 prong replacement...

changing to 2 prong is cheaper (outlets are what, 33 cents? but more work. I don't think changing to a GFCI protected breaker is gonna cover it - I'm no sparky though, I know it wouldn't fly in my area and they are extremely lax on code.

As long as each outlet (Plate) is marked as itsunclebill's post stated, yes. You could also use regular GFCI feed thru outlets in the first outlet of each circuit.

A ground fault protected outlet is better than a two wire outlet.

"can I achieve the same goal by having GFCI breakers installed"

No. Adding GFI protection doesn't do the same thing as having an equiptment ground. GFCI allows an ungrounded circuit to have 3 prong receptacles placed on it for convenience.

If a home inspector tells you that you HAVE to provide an equiptment ground to make them legal, find another inspector.

"No. Adding GFI protection doesn't do the same thing as having an equiptment ground. GFCI allows an ungrounded circuit to have 3 prong receptacles placed on it for convenience."

It provides almost the same level of personnel protection, and in many cases actually more protection.

A GFCI breaker or receptacle trips when the hot-neutral imbalance exceeds about 0.005 amps (5 milliamps).
This is well below the lethal level.
No ground is required for GFCI to operate correctly.

A g3 prong outlet provides NO protection to 2 wire loads, while a GFCI does.

GFCI breakers are expensive.
You can achieve the same thing by tracing the path of the existing wiring and placing a GFCI receptacle in the first outlet in the circuit and then feeding the rest of the branch circuit from the 'load' side of the GFCI receptacle.
The "no equipment ground" and "GFCI protected" stickers must be placed on every regular receptacle protected by either a GFCI breaker or GFCI receptacle.

Brickeye, I wasn't arguing the point of PROTECTION... I was saying that haveing the GFI DOES NOT PROVIDE AN EQUIPTMENT GROUND. The way the OP said it made me think that they expect to put a GFI breaker on the circuit and voila! it's grounded...

I agree that GFI is greater protection.

ctghost, you are a conscientious home-seller. I'm impressed. Also, you actually have a conscientious, and knowledgeable, home-inspector. I'm doubly impressed. He's got the big picture: if a circuit has no ground-path, simply replacing 2-prong rcps with 3-prong rcps ain't worth a damn - heck, it actually leaves you far worse off than you were when you started. Yup, GFCI protective devices are costive, but they protect people from injury. They're worth it. Re-read last paragraph of brickeye's post above; every word is golden.

I'm not very knowledgeable about this, but I am to understand you can use a regular GFCIO in a two wire house system and it will work as a GIF? Why do you need a ground if you are using the GFCI.

cowboyandy; correct, it doesn't provide an equipment ground.

However, it does "achieve the same thing", provided all you're trying to achieve is code compliance and safety.

I, for one, took the original poster's question as an inquiry as to whether or not installing a GFCI breaker would make his/her existing installation code-compliant. It will.

"I'm not very knowledgeable about this, but I am to understand you can use a regular GFCIO in a two wire house system and it will work as a GIF? Why do you need a ground if you are using the GFCI."

A GFCI does not require a ground to operate correctly.
It senses if the current between the hot and neutral do not match within 0.005 amps, and then shuts own the circuit.

It provides personnel protection, that in many ways is superior to having a 3-wire circuit.

A groundING conductor (AKA 'safety ground') provides a low impedance path to allow an over current device (fuse or breaker) to trip.
It provides protection to the equipment that is plugged into the 3-wire circuit more than anything.
If the hot wire comes in contact with a metal chassis, enough current should flow to trip the breaker.

If you are between the hot and ground it is extremely unlikely the current will ever approach the level needed to trip a breaker.
You will be in the circuit until you remove yourself, possibly by becoming unconscious and falling.

While it is rare for 120 V to push enough current through the heart to cause problems, under the wrong conditions it can happen ... wet or sweaty hands, solid contact, 120 V appliance in the tub with you (the drowning is actually often the actual cause of death, becoming unconscious in water is never a good idea).