A minimum period of imprisonment, however, was set at five years and eight months.
Nielsen had earlier pleaded guilty to three counts of sexual violation by unlawful sexual connection, one representative charge of attempted rape and two representative charges of indecent assault on a child.
Nielsen also admitted to knowingly making an objectionable publication, knowingly distributing an objectionable publication, and knowingly posting an objectionable publication.
The crimes he was sentenced for today came while he was subject to intensive supervision after a 2016 conviction for sending inappropriate Facebook messages to a child.
The Department of Internal Affairs (DIA) first detected Nielsen's new offending as he accessed a website known to be a gathering place for paedophiles the world over in 2017.
A undercover DIA agent watched as Nielsen shared images of child sexual exploitation.
Police and the DIA then raided Nielsen's home.
They found he possessed 1054 objectionable sexual images - some of which showed children as young as six years old committing sexual acts on other children at the instigation of an adult.
Other images showed the commission of sexual offences against children by an adult.
After his arrest, Nielsen provided police with a full confession in May 2017 and accepted he had paedophilic tendencies, his lawyer Genevive Vear told the court today.
The offences against the two children came when X was 7 to 8 years old, while Y was 13 to 14 years old.
The making an objectionable publication charge came after Nielsen took seven digital photos of X.
Crown prosecutor Claire Robertson said the two girls were vulnerable and the breach of trust was significant.
They had been left alone with the offender, while some of the offending also occurred while they were sleeping, the court heard.
Nielsen's crimes were also premeditated and were repeated on 10 occasions against the girls over a 14-month period, Robertson said.
Justice van Bohemen agreed and said there were "elements" of Nielsen's offending which showed a degree of planning, such as psychically restraining X in a room by placing a set of drawers across a bedroom door before attempting to rape her.
He also threatened her to "keep it secret or else" and further used psychological coercion against Y when he told her not to tell anyone or they would both go to jail.
Robertson added Nielsen's offending against the two girls "wasn't simply opportunistic" and he sought to "normalise the offending" by telling his victims "it was normal".
This showed a "pattern of grooming", Robertson told the court.
The prosecutor sought a sentence of preventative detention and said an indefinite prison term would serve the community best.
Much of the more serious aspects of Nielsen's offending are still denied, the court heard.
Nielsen was also convicted and jailed in 2005 for similar offending after he approached police and confessed voluntarily.
He will be on the child sex offender's register for the rest of his life.
Justice van Bohemen said: "You do pose a high-risk of reoffending."
Last year, former North Shore community board chairman Martin Henry Lawes was jailed for more than four years for paying for access to live child sex shows.
He was arrested in September 2017 after investigation into an international child pornography operation led by the FBI in the United States.
Lawes paid more than $100,000 over a decade to access live sex shows, which were filmed in Asia and streamed in New Zealand on his computers.
• If you've experienced sexual assault or abuse and need to talk to someone you can call the confidential Safe to Talk crisis helpline on: 0800 227 233
