The Erowid drug library confirms this, as does The Straight Dope, which offers some interesting insight in to the lack of reliability in testing urine for Opiates:

While many drug testers and researchers claim they can separate "false positives" from the real thing, other researchers dispute this. Sure, some guy with pinhole pupils and a tendency to walk into walls is going to have a hard time claiming he got that way due to excessive bagel consumption. The fact remains that if you got fired due to a borderline positive and had no follow-up tests or corroborating signs of drug use, a good lawyer would be able to cram that drug test--and your pink slip--down your bosses' throats. Currently, 87 percent of positives are reversed on follow-up.

Even some drug testing providers acknowledge this, as testing company Med Review points out in an article (since removed) on Opiate testing procedures:

Laboratories have demonstrated that poppy seeds contained in bakery products, such as bagels, can result in positive opiate (morphine) results at low levels (below 3000 ng/ml). Codeine may also be found after poppy seed ingestion, however morphine is predominant. Although morphine is an ordinary metabolite of codeine, the presence of codeine in poppy seeds probably comes from the poppy seeds themselves rather than as a metabolite. Generally high levels of codeine, above the morphine level, probably indicate codeine ingestion. However, terminal elimination of morphine following codeine use, long after the codeine was taken, may reveal only morphine. Interpretation of urinary opiate results is fairly complex. -- Med Review

However just because a test for Opiates can be fooled by poppy seeds, it does not mean it is impossible to further isolate illicit drugs such as heroin from being specifically detected in more specific tests. Diacetylmorphine -- aka heroin -- metabolizes rapidly after entering a person's system. Due to this rate of break down, heroin is rarely, if ever, picked up with standard drug testing and one must rely on identification of its metabolites. An assay is now available that can identify a metabolite unique to heroin called 6-0-monoacetylmorphine (aka 6-MAM). So if you test positive for 6-MAM, then the poppy seed defense goes out the window as this substance is unique to heroin alone.

The Discovery channel program Mythbusters put the poppy seed claim to the test, feeding mythbuster Adam an enitre loaf of poppyseed cake and Jamie three poppy seed bagels. Tests were administered every half hour, and Adam tested positive after the first test. Jamie was slower, taking two hours to test positive after eating the bagels. Both tested positive for the remainder of the day, but were clean the next morning, 18 hours later. Myth status: confirmed.