A vehicle diagnostic communication system and a method of establishing a secure diagnostic session at a vehicle is disclosed. The method includes the steps of: providing a seed value from an electronic control unit (ECU) to a vehicle diagnostics tool; determining a first challenge response at the diagnostics tool, a remote server coupled to the diagnostics tool, or both, wherein the first challenge response is calculated using the seed value and one or more iterations of a key derivation function; providing the first challenge response to the ECU; and if the first challenge response is validated at the ECU, conducting a diagnostic session between the diagnostics tool and the ECU.