An influenza pandemic could cost 3700 lives and put 20,000 more people in hospital, research commissioned by the Ministry of Health shows.

The Director General of Health, Dr Karen Poutasi, said the predictions reinforce the need to take the illness seriously and continue preparations to deal with a major outbreak of flu.

The research, published in the latest New Zealand Medical Journal, says a flu pandemic could also see more than a million New Zealanders needing to visit a doctor, placing added strain on the health system.

Dr Poutasi said the figures were sobering but no surprise because concern about a pandemic of bird flu or a similar type of flu had been mounting worldwide.

"Nobody can be sure where or when it will emerge, but the ongoing H5N1 bird flu outbreaks in Southeast Asia have the experts concerned. We need to act prudently and responsibly in continuing to prepare," she said.

The World Health Organisation said last month that up to 100 million people could die within weeks if a bird flu pandemic broke out.

The strain of bird flu known as H5N1 has killed 47 people, who appear to have caught it from chickens and other poultry.

Fears are that H5N1 could mutate into a form that could pass between humans. So far, there has been no evidence that mutation has occurred. The only previous probable case of human-to-human transmission happened in Thailand, where a mother died after cradling her sick daughter in her arms for hours.

Dr Poutasi said it was important to strike a balance between making people aware of the seriousness of a flu pandemic and preventing panic.

"The biggest assurance is that we have done the planning. There's no magic solution."

The ministry announced in February that it was stockpiling more than 800,000 doses of an antiviral drug that could be used to treat 20 per cent of the population in the event of a major bird flu outbreak.

Dr Poutasi said the new research, conducted by public health experts Nick Wilson, Osman Mansoor and Michael Baker, was part of the ministry's "ongoing" preparation for a pandemic which included a national pandemic plan developed in 2002.

The researchers used a computer model developed by the US Centres for Disease Control and Prevention to estimate the impact of a flu pandemic on the local population and the health sector.

They cautioned that the model assumed no public health interventions to control disease spread, such as the use of a vaccine or antiviral drugs.