The invention is concerned with an Internet telephone system having a client/server architecture and providing voice communication between client stations over the Internet through gateway servers. The system includes a plurality of software modules within each of the gateway servers for performing digital signal processing (DSP), and an account manager placed at an arbitrary location on the Internet for monitoring transactions between client stations to produce billing information. The system is characterized by low latency, full duplex voice communication, and permits telephone to telephone or PC to telephone connections.