(CNN) -- Secretary of State Hillary Clinton on Tuesday called internet freedom as fundamental as free speech itself, saying cyberspace is the 21st century town square where governments need to find a balanced way to preserve universal principles such as liberty, transparency and free expression.

"The freedoms of expression, assembly, and association online comprise what I have called the freedom to connect," Clinton said in a speech titled "Internet Rights and Wrongs: Choices & Challenges in a Networked World" at George Washington University.

"The United States supports this freedom for people everywhere, and we have called on other nations to do the same," she said.

She cited repressive internet practices in Syria, China, Vietnam and Cuba, and denounced Iran's ongoing web restrictions in the face of new mass protests there amid demonstrations that have been sweeping the Mideast. Clinton highlighted the newest textbook example of the Internet's power: the revolution in Egypt, where Twitter and Facebook fueled a successful rebellion.

"We believe that governments who have erected barriers to internet freedom -- whether they're technical filters or censorship regimes or attacks on those who exercise their rights to expression and assembly online -- will eventually find themselves boxed in," Clinton said.

"They will face a dictator's dilemma and will have to choose between letting the walls fall or paying the price to keep them standing -- which means both doubling down on a losing hand by resorting to greater oppression, and enduring the escalating opportunity costs of missing out on the ideas that have been blocked," she said.

Those ideas ensure a nation's viability: "Open societies give rise to the most lasting progress" and affirm "that the rule of law is the firmest foundation for justice and peace, and that innovation thrives where ideas of all kinds are aired and explored," she said.

Clinton also cited how other countries, such as Myanmar and Vietnam, restrict or abuse citizens' access to the internet, to which 2 billion people worldwide are now connected, nearly a third of humanity.

In response, the United States has awarded more than $20 million in competitive grants to technologists and activists finding ways to fight against "internet repression," and will award $25 million more this year, she said.

"The United States continues to help people in oppressive internet environments get around filters, stay one step ahead of the censors, the hackers, and the thugs who beat them up or imprison them for what they say online," she said.

"Some have criticized us for not pouring funding into a single technology, but we believe there is no silver bullet in the struggle against internet repression. There's no 'app' for that," she said, drawing laughter from the campus audience.

"Start working, for those of you out there," Clinton told students in the audience, departing from her prepared speech.

In the U.S. Senate, however, the Republican minority on the Foreign Relations Committee released a report about China Tuesday suggesting that Clinton's State Department is not up to the task of overseeing internet freedom efforts.

"China is also beginning to export its Internet censorship technologies to other countries bent on controlling information," Sen. Richard Lugar of Indiana, the Republican leader on the committee, wrote in a preamble to the report.

"In part because of this, and because U.S. international broadcasting must already use Internet circumvention technology on a daily basis to reach its audience in countries such as China, Iran, Cuba, Belarus and other closed societies, I have come to the conclusion that the Broadcasting Board of Governors, which oversees these operations -- and not the State Department, which has been somewhat dilatory in disbursing the $50 million in Internet Freedom funds granted by Congress -- should be the primary driver in the U.S. government on this issue," Lugar wrote.

In her speech, Clinton described the repressive regimes' landscape as "complex and combustible," and added the United States sides with cyberspace openness.

"We recognize that an open internet comes with challenges. It calls for ground rules to protect against wrongdoing and harm. And internet freedom raises tensions, like all freedoms do. But its benefits are worth it," she said.

Clinton listed three universal principles, or challenges, for the internet: liberty and security; transparency and confidentiality; and free expression while fostering tolerance and civility.

"Without security, liberty is fragile. Without liberty, security is oppressive," she said. "The challenge is finding the proper measure -- enough security to enable our freedoms but not so much, or so little, as to endanger them."

Governments must maintain openness on the web while at the same time recognizing that terrorists, human traffickers, and child pornographers use the internet to carry out crimes, Clinton said.

As it tracks criminals and terrorists online, the United States is also working with other countries to fight "transnational crime in cyberspace" and has pushed the United Nations to pass a resolution on cybercrime this year, she said.

"We need successful strategies for dealing with these threats and more, without constricting the openness that is the internet's greatest attribute," she said.

Clinton touched on the WikiLeaks controversy when addressing how the internet's culture of transparency is based on instantaneous information, but there must be room for confidentiality, too.

Governments must be able to enjoy confidential communication on the internet, she said, especially in such matters as U.S. diplomats working with former Soviet states on securing loose nuclear materials sought by terrorist or diplomats sharing through embassy cables the identities of human rights activists doing perilous work in oppressive countries.

"Fundamentally, the WikiLeaks incident began with an act of theft. Government documents were stolen, just the same as if they had been smuggled out in a briefcase," Clinton said. "Some have suggested that this theft was justified, because governments have a responsibility to conduct all of their work out in the open, in the full view of our citizens.

"I disagree. The United States could neither provide for our citizens' security nor promote the cause of human rights and democracy around the world if we had to make public every step of our efforts."

The third common principle is the protection of free expression -- even when it's "false, offensive and incendiary" -- while fostering tolerance and civility, Clinton said.

The United States does restrict some speech under laws about libel, slander, defamation and imminent violence, but those rules are enforced transparently and citizens can appeal how they are applied, she said.

"When it comes to online speech, the United States has chosen not to depart from our time-tested principles. We urge our people to speak with civility and to recognize the power and reach that their words can have online. We've seen in our own country tragic examples of how online bullying can have terrible consequences," she said.

Repressive regimes that erect internet walls restricting expression and opposition content will pay moral, political and economic costs, Clinton said.

"Countries may be able to absorb these costs for a time, but we believe they're unsustainable in the long run," she said. "Instead, I urge countries everywhere to join us in a bet we have made -- a bet that an open Internet will lead to stronger, more prosperous countries."

CNN's Adam Levine contributed to this report.