An IP telephone appliance providing secure voice communication and data transmission for itself and other IP devices and applications associated with it. The IP telephone appliance incorporates a processor for converting voice signals received from a user into VoIP packets, and an IPSec stack encoding packets prior to transmission. The IP telephone appliance also encodes packets on behalf of other devices and applications prior to transmitting the packets to a destination. When encoded voice or data packets are received from a source device, the IP telephone appliance decodes the packets and determines their destination. If the IP telephone appliance is the ultimate destination, the voice/data packets are converted to voice/telephony signals and provided to the user. Otherwise, if the ultimate destination is another device on the network, the IP telephone appliance forwards the decoded packets to the ultimate destination.