permutations - fast & with low memory consumption?

[Christian Meesters]

Hi,

I'd like to hack a function which returns all possible permutations as lists
(or tuples) of two from a given list. So far, I came up with this solution,
but it turned out to be too slow for the given problem, because the list
passed ("atomlist") can be some 1e5 items long:     

def permute(atomlist, size = 2):
    """
        returns a list of atoms grouped by two
    """
    if not size or not atomlist:
        return [atomlist[:0]]
    else:
        result = list()
        for i in xrange(len(atomlist)):
            pick = atomlist[i:i+1] # sequence slice
            remainder = atomlist[:i] + atomlist[i+1:] # keep [:i] part
            for x in __permute(remainder, size = size - 1):
                result.append(pick + x)
        return result

Does anybody know a solution which consumes less memory and is possibly
faster, perhaps using generator expressions? All my attempts so far failed.

Any help appreciated!
TIA
Christian