Inserting code in this LaTeX document with indentation

Here is how to add inline code:

You can add inline code with {\tt code } or \texttt{ code }. If you want to format the inline code, then it would be best to make your own command

\newcommand{\code}[1]{\texttt{#1}}

Also, note that code blocks can be loaded from other files with

\lstinputlisting[breaklines]{source.c}

breaklines isn't required, but I find it useful. Be aware that you'll have to specify \usepackage{ listings } for this one.

Update: The listings package also includes the \lstinline command, which has the same syntax highlighting features as the \lstlisting and \lstinputlisting commands (see Cloudanger's answer for configuration details). As mentioned in a few other answers, there's also the minted package, which provides the \mintinline command. Like \lstinline, \mintinline provides the same syntax highlighting as a regular minted code block:

\documentclass{article}

\usepackage{minted}

\begin{document}
  This is a sentence with \mintinline{python}{def inlineCode(a="ipsum)}
\end{document}

You could also use the verbatim environment

\begin{verbatim}
your
code
example
\end{verbatim}

Use listings package.

Simple configuration for LaTeX header (before \begin{document}):

\usepackage{listings}
\usepackage{color}

\definecolor{dkgreen}{rgb}{0,0.6,0}
\definecolor{gray}{rgb}{0.5,0.5,0.5}
\definecolor{mauve}{rgb}{0.58,0,0.82}

\lstset{frame=tb,
  language=Java,
  aboveskip=3mm,
  belowskip=3mm,
  showstringspaces=false,
  columns=flexible,
  basicstyle={\small\ttfamily},
  numbers=none,
  numberstyle=\tiny\color{gray},
  keywordstyle=\color{blue},
  commentstyle=\color{dkgreen},
  stringstyle=\color{mauve},
  breaklines=true,
  breakatwhitespace=true,
  tabsize=3
}

You can change default language in the middle of document with \lstset{language=Java}.

Example of usage in the document:

\begin{lstlisting}
// Hello.java
import javax.swing.JApplet;
import java.awt.Graphics;

public class Hello extends JApplet {
    public void paintComponent(Graphics g) {
        g.drawString("Hello, world!", 65, 95);
    }    
}
\end{lstlisting}

Here's the result: