The US will spend $19m to break the firewalls that China built to prevent users from visiting certain sites, which the US considers is a breach of Internet freedom.
State Department officials have said that they would invest the money to increase efforts to work around Internet controls in China and other authoritarian states.
Recently, the US and China concluded their annual talks, in which Secretary of State Hillary Clinton reportedly criticised Beijing’s clampdown on domestic critics.
Chinese authorities had blocked search results for "Hillary Clinton" after she praised the Jasmine revolution that stormed the Arab world in February-March this year. During the same time, networking site for professionals LinkedIn was also blocked in China after a group started discussing the revolution.
The new funding against Chinese firewalls will be part of the $30m which the US Congress allocated in the current fiscal year for Internet freedom.
According to the AFP report, the assistant secretary of state in charge of human rights Michael Posner said the funding would support new technology that acts as a "slingshot" and throws censored content back at the country censoring it.
"In effect, we’re going to be redirecting information back in that governments have initially blocked," Posner said.
"This can be done through email or posting it on blogs or RSS feeds or websites that the government hasn’t figured out how to block," he said.
"We’re responding with new tools. This is a cat-and-mouse game. We’re trying to stay one step ahead of the cat," Posner said.
The US position on Internet freedom has strained relations with China and other countries. Clinton has named China, Iran, Saudi Arabia and Egypt among countries that censored the Internet or harassed bloggers. And she says that in Egypt and Iran, opposition protests have been fuelled partly by new Internet technologies.
Under Clinton, the US State Department has pushed Internet freedom as a basic human right.
In February this year, in a speech in Washington, Clinton praised social networks for their "positive role" in protests in Tunisia and Egypt. However, the US government was in court at the same time in a case against WikiLeaks, the online whistleblower which had angered teh US by publishing secret wires related to its policies.