The Yemeni government has a tribal rebellion and a secessionist movement to deal with, and has regarded al-Qaeda as a lesser priority, a BBC correspondent in Yemen says.
"It's time for the international community to make it clear to Yemen that there are expectations and conditions on our continuing support for the government so that they can take actions which will have a better chance to provide that peace and stability to the people of Yemen and the region," Mrs Clinton said.
US President Barack Obama has ordered a review into the Christmas Day incident.
The suspect had apparently been trained by al-Qaeda in Yemen, and his father had notified US officials of his extremist views.
'Used as base'
A preliminary investigation found that the state department complied with procedures about potential threats, but officials now had to decide whether those procedures themselves were appropriate, Mrs Clinton said.
Threats in Yemen to US interests pre-dated the current holiday season, she said, reiterating advice to US citizens there to be vigilant.
BBC correspondent in Yemen
There are numerous security challenges in Yemen. The government is corrupt and unpopular, so backing it to fight al-Qaeda is risky, while the use of US missiles and drones to kill al-Qaeda leaders is very sensitive.
An overt US military presence is politically impossible, as Yemen is a conservative tribal society where hostility to the US runs deep.
Yemen is being torn apart by a tribal rebellion and a secessionist movement. This has been a bigger priority for the government than al-Qaeda.
Government authority in much of the country is non-existent. Tribal chiefs run these areas, and are sometimes willing to accommodate al-Qaeda militants.
Other issues include worsening poverty and unemployment, already the worst in the Arab world, and the jockeying for power among different factions as President Ali Abdallah Saleh ages
Speaking in Washington, Mrs Clinton said: "We see global implications from the war in Yemen and the ongoing efforts by al-Qaeda in Yemen to use it as a base for terrorist attacks far beyond the region."
Al-Qaeda in the Arabian Peninsula (AQAP) last week said it was behind the alleged plot to bomb the plane.
The US embassy was the target of an attack in September 2008 in which an American was killed. The attack was blamed on AQAP.
From Monday all travellers flying to America are being subjected to new security measures, introduced by the US government.
Airport staff will now carry out extra screening of people from 14 countries, including those the US considers to be state-sponsors of terrorism - Cuba, Iran, Sudan and Syria.
Yemen and Nigeria - through which the alleged bomber travelled - also face the new restrictions.
Passengers flying from other countries will be checked at random.
The Yemeni authorities have tightened security measures at Sanaa's airport, as well as around several other embassies.
Yemeni security forces, meanwhile, shot dead two militants north of the capital, Sanaa, said officials.
Correspondents say the security situation in Yemen is complicated by an abundance of firearms, an insurgency in the north and a secessionist movement in the south.
But the prospects of re-asserting central government authority over the lawless areas where al-Qaeda is based look, in the opinion of some analysts, remote - even with beefed-up American support.
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