It looks as though Google has made offline speech recognition available from Google Now for third-party apps. It is being used by the app named Utter.
Has anyone se
A simple and flexible offline recognition on Android is implemented by CMUSphinx, an open source speech recognition toolkit. It works purely offline, fast and configurable It can listen continuously for keyword, for example.
You can find latest code and tutorial here.
Update in 2019: Time goes fast, CMUSphinx is not that accurate anymore. I recommend to try Kaldi toolkit instead. The demo is here.