He also defended 42-day detention, saying the authorities could not afford a "head-in-the-sand" approach to it.
Both the Conservatives and Liberal Democrats said Mr Brown could not claim to champion freedom when he was attempting to undermine it.
Downing Street has denied that the speech was intended as a response to David Davis - who quit as an MP and shadow home secretary last week to fight a by-election on the single issue of the "strangulation" of British freedoms.
But a spokesman would not say if it was planned before Mr Davis stepped down last week. Labour has not yet confirmed whether it will stand a candidate against him.
In his speech Mr Brown said it was time to write a "new chapter" in Britain's history which would both protect citizens' security and individual liberties.
He said those people threatening security were ready to use the most up-to-date technology - and the challenge was to use technology to counter that.
"New technology is giving us modern means by which we can discharge these duties, but just as we need to employ these modern means to protect people from new threats, we must at the same time do more to guarantee our liberties," he said.
"Facing these modern challenges, it is our duty to write a new chapter in our country's story - one in which we both protect and promote our security and our liberty, two equally proud traditions."
During his speech Mr Brown also announced that he would ask the Information Commissioner to produce a report each year on surveillance in the UK, which would then be debated by MPs.
On the issue of pre-charge detention limits for terrorist suspects, he said he believed that the Civil Contingencies Act - which some critics say could be used instead of the 42-day limit - would have been potentially more damaging to communities, than the measures he had proposed.
In a question and answer session he said: "This is neither preventative detention or internment, this is to deal with a severe terrorist incident but in doing so, at all times, trying to protect the civil liberties of the individual."
He said terrorists wanted to destroy British "freedoms" and that must not be allowed.
But he said "to assume that the laws and practises which have applied in the past are sufficient always to face the future...would be the politics of complacency".
Mr Davis stunned Westminster last week by saying he was quitting to force a by-election in his Haltemprice and Howden constituency.
He said he wanted to raise the issue of civil liberties being threatened by measures such as 42-day detention, identity cards, the increasing prevalence of CCTV and the growing size of the DNA database.
He said he had been "overwhelmed" by public support. Writing on his campaign website he said: "This government increasingly treats our fundamental freedoms with disdain. I believe it is time to take a stand."
Speaking after Mr Brown's speech, shadow home secretary Dominic Grieve said 42-days detention could "act as a recruiting sergeant for terrorists and dry up key sources of intelligence in the community".
"It is entirely incompatible for him to announce that he wishes to champion liberty, when he has chosen to try and undermine it," he added.
Chris Huhne, the Lib Dems home affairs spokesman, said Mr Brown painted himself "as a friend of freedom when his government has done more than any other in recent times to undermine civil liberties".
"Hard-won freedoms are not being destroyed by terrorists but eroded by a government intent on looking tough," he said.