By Andrew Quinn

(Reuters) - Some day soon, when pro-democracy campaigners have their cellphones confiscated by police, they'll be able to hit the "panic button" -- a special app that will both wipe out the phone's address book and emit emergency alerts to other activists.

The panic button is one of the new technologies the U.S. State Department is promoting to equip pro-democracy activists in countries ranging from the Middle East to China with the tools to fight back against repressive governments.

"We've been trying to keep below the radar on this, because a lot of the people we are working with are operating in very sensitive environments," said Michael Posner, assistant U.S. secretary of state for human rights and labor.

The U.S. technology initiative is part of Secretary of State Hillary Clinton's push to expand Internet freedoms, pointing out the crucial role that on-line resources such as Twitter and Facebook have had in fueling pro-democracy movements in Iran, Egypt, Tunisia and elsewhere.

The United States had budgeted some $50 million since 2008 to promote new technologies for social activists, focusing both on "circumvention" technology to help them work around government-imposed firewalls and on new strategies to protect their own communications and data from government intrusion.

"We're working with a group of technology providers, giving small grants," Posner told reporters.

"We're operating like venture capitalists. We are looking for the most innovative people who are going to tailor their technology and their expertise to the particular community of people we're trying to protect."

The United States first began to publicly leverage new Internet technologies in 2009, when it asked Twitter to delay a planned upgrade that would have cut service to Iranians who were organizing mass protests over disputed elections.

Since then it has viewed new media technologies as a key part of its global strategy, facing off with China over censorship of Google results and launching its own Twitter feeds in Arabic, Farsi and Hindi.

Some U.S. lawmakers have criticized the department for not doing enough to promote the new technology, but Posner said it was building momentum as new initiatives are rolled out.

"We're now going full speed ahead to get the money out the door," he said.

CAT-AND-MOUSE

Posner said the United States has helped fund development of about a dozen new circumvention technologies now being rolled out, and that more would follow as activists play an increasingly complex game of cat-and-mouse with censors.

He said that the experience of pro-democracy protesters in Cairo's Tahrir Square in February underscored the centrality of cellphones to modern grassroots political movements. The United States, he said, was working on new devices like the "panic button" and secure text message services to protect both data and databases.

"The world is full of ... governments and other authorities who are capable of breaking into that system," Posner said. "A lot of activists don't know what their options are. They don't have access to technology."

The United States has funded training for some 5,000 activists around the world on the new technologies -- and some sessions have turned up unnerving surprises.

At a recent training session in Beirut, experts examined the computer of a Tunisian activist and discovered it was infected with "key-logging" software that could communicate what he was typing -- presumably to security agents.

"They started to go around and look at what was on the other peoples' computers. A guy from Syria had 100 viruses in his machine ... this is the tip of the iceberg," he said.

Posner conceded that the U.S. move to develop these new technologies carried some risks.

Secure on-line tools useful for underground pro-democracy activists might also be useful for drug cartels or terrorist cells, raising new law enforcement and national security issues that need to be resolved, he said.

"The fact is al Qaeda probably has their own way of gathering some of these technologies," Posner said. "The goal here is to protect people who are, in a peaceful manner, working for human rights and working to have a more open debate."

(Editing by Vicki Allen)

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