Here is some code to get around this.

PHP:

  $url = "http://192.168.1.$camera/cgi-bin/snapshot.cgi";

  $options = array(
          CURLOPT_URL            => $url,
          CURLOPT_HEADER         => true,
          CURLOPT_VERBOSE        => true,
          CURLOPT_RETURNTRANSFER => true,
          CURLOPT_FOLLOWLOCATION => true,
          CURLOPT_SSL_VERIFYPEER => false,    // for https
          CURLOPT_USERPWD        => $username . ":" . $password,
          CURLOPT_HTTPAUTH       => CURLAUTH_DIGEST
  );

  $ch = curl_init();

  curl_setopt_array( $ch, $options );

  try {
    $raw  = curl_exec( $ch );

    // validate CURL status
    if(curl_errno($ch))
        throw new Exception(curl_error($ch), 500);

    // validate HTTP status code (user/password credential issues)
    $status_code = curl_getinfo($ch, CURLINFO_HTTP_CODE);
    if ($status_code != 200)
        throw new Exception("Response with Status Code [" . $status_code . "].", 500);

  } catch(Exception $ex) {
      if ($ch != null) curl_close($ch);
      throw new Exception($ex);
  }

  if ($ch != null) curl_close($ch);

  $start = strpos($raw,"\xff");
  $end   = strpos($raw,$boundary,$start)-1;
  $frame = substr("$raw",$start,$end - $start);

  header("Content-type: image/jpeg");
  echo $frame;


Javascript -- cache the http credentials in the background so the browser doesn't ask for them:

function cacheHttpCameraCredentials(sender='default') {
    // Cache http user/pass for cameras
    $.ajax({
        type: 'GET',
        url: 'http://192.168.1.123/cgi-bin/snapshot.cgi',
        username: 'admin',
        password: 'admin',
        success : function(data) {
        //Success block
        console.log('Cached webserver camera credentials: ' + sender);
       },
        error: function (xhr,ajaxOptions,throwError){
        //Error block
        console.log('Error caching camera credentials: ' + sender);
      },
    });
}