An Internet Protocol telephone system and method uses a telephone (26) to place and receive voice over Internet Protocol (VoIP)-based telephone calls and public switched telephone network (PSTN)-based telephone calls. An off-hook condition with the telephone (26) is detected and a sequence of signals generated by the telephone (26) is received. At least a first signal generated by the telephone (26) is buffered while the system attempts to detect a predetermined signal that signifies a VoIP-based call. Upon detection of the predetermined signal, the system intercepts subsequent signals in the sequence, absent the at least first signal that was buffered, and places the VoIP-based call via an internet (12). Otherwise, the system places the PSTN-based call via a PSTN (16).