...

Layer Two Tunneling Protocol "L2TP" extends the PPP model by allowing the L2 and PPP endpoints to reside on different devices interconnected by a packet-switched network.  L2TP includes PPP authentication and accounting for each L2TP connection. Full authentication and accounting of each connection may be done through a RADIUS client or locally. L2TP traffic uses UDP protocol for both control and data packets. UDP port 1701 is used only for link establishment, further traffic is using any available UDP port (which may or may not be 1701). This means that L2TP can be used with most firewalls and routers (even with NAT) by enabling UDP traffic to be routed through the firewall or router.  L2TP standard is defined in RFC 2661. The L2TPv3 support added in 7.1 version. Support IPv4, IPv6.

Introduction

It may be useful to use L2TP just as any other tunneling protocol with or without encryption. The L2TP standard says that the most secure way to encrypt data is using L2TP over IPsec (Note that it is the default mode for Microsoft L2TP client) as all L2TP control and data packets for a particular tunnel appear as homogeneous UDP/IP data packets to the IPsec system. 

...