The Department of Internal Affairs undertook 47 investigations into digital child exploitation in 2023, uncovering 2,966,773 pieces of online material.
The level of content being shared was "extremely worrying", digital child exploitation team manager Tim Housten said.
The online material seized by the DIA included videos and images of "horrific" child sexual abuse, as well as violent extremist content and objectionable adult content.
"The content we are seizing and prosecuting against is not innocent pictures of children, it is serious and abhorrent sexual abuse of children," Housten said.
In addition to the materials, investigators also seized 209 devices and successfully prosecuted 15 offenders last year.
The rest of the alleged offenders were still going through the legal process.
More than one million websites harbouring child sexual abuse materials were blocked by a filtering system.
Housten said that the material sized included AI-generated images and videos, showing that exploitative material generated by AI was on the rise.
"AI-generated content is becoming easier to create, which normalises and encourages the physical abuse of children," he said.
"It takes significant resource and time to determine whether a child is AI-generated or not and takes our investigators away from identifying real-world children who are at risk."
Internationally, reports of online child sexual exploitation were also increasing.
The DIA reported referrals to New Zealand from the National Centre for Missing and Exploited Children in the United States increased by 283% from 2021-2023 compared to 2018-2020.
Over the year, the agency worked with Police, Customs and Oranga Tamariki to safeguard 35 children from harm or risk of harm from an offender, Housten said.
"The strong partnerships we have with other agencies in NZ Police, Customs and Oranga Tamariki has been critical in taking children out of potentially harmful environments."
