As of 1st Feb 2013 Oracle have released Java 1.7.0 update 13 and this workaround is no longer necessary www.java.com

Java users on Mac OSX can no longer use the Java browser plugin in Safari due to a mistake in the plugin whitelist pushed out recently:
Open a terminal and type
more /System/Library/CoreServices/CoreTypes.bundle/Contents/Resources/XProtect.meta.plist
And you will see the following:
<?xml version="1.0" encoding="UTF-8"?>
<!DOCTYPE plist PUBLIC "-//Apple//DTD PLIST 1.0//EN" "http://www.apple.com/DTDs/PropertyList-1.0.dtd">
<plist version="1.0">
<dict>
       <key>JavaWebComponentVersionMinimum</key>
       <string>1.6.0_37-b06-435</string>
       <key>LastModification</key>
       <string>Thu, 31 Jan 2013 04:41:14 GMT</string>
       <key>PlugInBlacklist</key>
       <dict>
               <key>10</key>
               <dict>
                       <key>com.macromedia.Flash Player.plugin</key>
                       <dict>
                               <key>MinimumPlugInBundleVersion</key>
                               <string>11.3.300.271</string>
                       </dict>
                       <key>com.oracle.java.JavaAppletPlugin</key>
                       <dict>
                               <key>MinimumPlugInBundleVersion</key>
                               <string>1.7.11.22</string>
                       </dict>
               </dict>
       </dict>
       <key>Version</key>
       <integer>2028</integer>
</dict>
</plist>
Notice that the MinimumPlugInBundleVersion for com.oracle.java.JavaAppletPlugin is set to 1.7.11.22 but if you type java -version you will see
java version "1.7.0_11"
Java(TM) SE Runtime Environment (build 1.7.0_11-b21)
Java HotSpot(TM) 64-Bit Server VM (build 23.6-b04, mixed mode)
The b21 means build 21 is the released build of Java 7 update 11.
To fix your XProtect.meta.plist you can edit it from the Terminal using
sudo nano /System/Library/CoreServices/CoreTypes.bundle/Contents/Resources/XProtect.meta.plist
and change
<string>1.7.11.22</string>
to
<string>1.7.11.21</string>
To save your changes do Ctrl-O [Enter] Ctrl-X and then restart Safari.