A US Congress panel has backed legislation which would prevent internet companies from co-operating with authorities in China.
Key words are being filtered by web giants in China
Laws stopping firms such as Yahoo from revealing personal data to Beijing and other governments were supported by the Foreign Relations Committee.
Under the legislation, companies would also have to reveal terms and phrases they filtered in certain countries.
The bill now needs approval from the House Energy and Commerce Committee.
Republican representative Chris Smith introduced the legislation last year after allegations that Yahoo provided information to the Chinese government that led to the jailing of two dissidents.
The Chinese government also enforces strict laws on internet use, blocking content it considers a threat, including references to the Tiananmen Square massacre and notable dissidents.
"Dictatorships need two pillars to survive - propaganda and secret police. The internet - if misused - gives them both spades," Mr Smith said.
Yahoo has been accused of releasing data that led to the jailing of online writer and corruption critic Li Zhi for eight years in 2003, and to the imprisonment of reporter Shi Tao in a separate case.
Meanwhile Google has been criticised for blocking politically sensitive terms on its Chinese site.
And Microsoft has faced claims that it closed down the blog of a critic of the Chinese government - angering human rights groups.
Yahoo said that the bill "highlights the complexity of the issues confronting US companies doing business in China and similar countries".
"We look forward to working constructively with Congress to find practical solutions," it added.
Meanwhile Microsoft said it was working with other technology firms to design principles for dealing with "laws, regulations and policies that interfere with the achievement of human rights".
"These are difficult issues and Microsoft is working in tandem with other companies and entities to resolve these issues," Microsoft said.