We use DE as both a treatment and preventive. They had lots of mites when we got them (no lice, thank goodness) but were extremely difficult to catch, so we just put the DE into their dust bath box and sprinkled a little in the bedding in the coop. Took about 10 days but since then, haven't seen a bug on them of any kind.
It's a "mechanical" action...the tiny, ultra sharp granules get into the joints of the bugs and as they move, it cuts holes in the carapace and they eventually die from dehydration. I used it on mites for our girls and it took about a week or so. The infestation wasn't horrible, so we were very pleased not to have to use any sort of chemicals. We continue to use it as a preventive and it works extremely well. When we change the bedding, we sprinkle a little (maybe 1/2 C for a 4 x 5 coop) into the litter and work it in. We also sprinkle a little into their dust bath. Haven't seen a bug since!