Echo can be caused by either acoustic feedback or electrical imbalances in impedance, either way you should be able to resolve most causes or at least pin point where your system is failing.  We have put together this step by step procedure to help you isolate the issue and then take steps to resolve it.

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Locating the cause of echo.

Since we know that the two causes of echo are acoustic and electrical the first step in isolating the cause of the echo is to try to determine who widespread the problem is, how often it occurs and is it acoustic echo.

Typically acoustic echo will be continuous with certain words being noticed more than others.  Both ends will hear the echo.

1. Is the echo on all phones or just one or two?  The first step would be to simply hold your hand over the speaker in the handset.  Does that stop or reduce the echo?  Change out the phone, as some cheap phones can have faulty insular separation that allows voice to travel inside the handset from the ear speaker back to the mouth piece.  Adjust the volume of the phone, although this can lower echo that is actually due to impedance on down the line, it can be a useful way to test for acoustic feedback.

Echo caused by an impedance mismatch or other electrical cause will likely result in echo that is strong on the VoIP callers side, but unnoticeable on the far end.  more

The first step in determining if the echo is local (inside the premise) would be to look for and eliminate any faulty connections and electrical interference.

• If your VoIP connection is with an ATA device connected to a router/modem, then for troubleshooting connect one phone only without any splitters directly to the ATA with preferably a short RJ11 cable. 
• Make sure that you have proper grounding and a "clean" power source.
• Check locations of the ATA, router, modem and all cables.  Isolate the devices from any power supplies to remove any possibility of electrical induction.  Has the echo stopped or is it still occurring?

If the echo stops when the house wiring is eliminated the cause is to be found in one of the following:

• Existing lengthy untwisted inside phone wiring within your home or business.
• The use of cheap splitters.
• Electrical interference in the premise wiring, such as phone cables running along florescent light's ballasts.
• Damaged of faulty connections.

If after eliminating the above, you still experience echo, then it is likely the echo is being caused by improper echo cancellation on the PSTN gateways.  Understanding that echo only becomes noticeable when there is a delay between speaking and hearing your voice echoed, the longer the delay the more noticeable the resulting echo.  Traditional PSTN connections have echo, due to delay, but echo cancellation is used for long distance PSTN calls.  Additionally, echo cancellation is used on all cellular calls to the PSTN.  Here are some things to look for:

• Are all calls being hampered by echo, or are they specific calls, or specific International destinations?  In some cases you may find that calling certain countries may result in echo.  This is most likely due to your provider using a partner for these calls that we would classify as a B or C grade carrier.  And in some cases perfectly good numbers can result in poor echoing connections after having been good for some time.  In both these cases, call your provider and inform them of the issue and hopefully they will be able to take measures to correct the issue.
• Are your calls normally good, then all of a sudden go to poor?  If you fall into the category, then it is most likely one of two issues.  Your connection is experiencing temporary network problems or your provider has changed partner carriers to one that has a lower grade of quality.  In either case you need to call your provider and let them be aware of the issues.  Hopefully, especially in the case of temporary network issues, they should be short lived.

If you are able to access settings in your ATA or are using Asterisk you should be able to reduce echo by tweaking some settings. 

• The transmit and receive gain settings in Asterisk (txgain and rxgain) can be set to negative values.  This will reduce the sound volumes, but also produce more acceptable echo.  Set txgain = 10 or thereabouts which should have a sufficient call volume with little perceived echo.
• For an Asterisk system, get a card with an echo cancellation chip.  In the long run the additional expense is well worth it.
• Make sure that no other device, including USB ports are using the same IRQ as your gateway card.  It should be the only device that can use that particular IRQ.

If your echo is the type that leaks from the incoming voice to the outgoing voice then some ATAs have TX and Rx Gain adjustments that can be used for the analog FXO port. 

• Enter the edit page of the device.  Locate the Tx Gain and Rx Gain settings.  Start by lowering the values, then saving your changes.  Test by making calls until the echo is moderated.
• The default settings for TX gain on the Cisco/Linksys PAP2T can be on the high side causing echo.  You may want to adjust the FXS Port Input Gain and FXS Port Output Gain, one setting at a time, using increments of three, to approximate values of -1 and -11.  Although these values will vary dependant on networks and other hardware you may find these values will eliminate echo and still produce adequate volume.
• For Asterisk deployments use zapata.conf to adjust the rxgain and txgain.

For more about Asterisk settings we suggest you go to VoIP Wiki.