A controversial internet filter which blocks access to hundreds of websites on a secret Internal Affairs blacklist has gone live.

The "child exploitation" system was introduced last month in a bid to stop online paedophile activity.

But it has come under fire from internet service providers for being ineffectual and giving hackers an easy target.

A similar filter system caused a storm of protest when it was introduced in Britain last year. Authorities promised it would be used only to block child abuse websites, but politicians later tried to use the technology to stop users accessing file-sharing sites.

Internet service providers (ISPs) can choose whether to use the Government-owned software, which filters requests to access banned sites.

Department of Internal Affairs deputy secretary Keith Manch said it was one of several tools being used to combat child abuse on the internet.

"We have been trialling this system for a couple of years and have put a lot of planning into it. After consulting ISPs we decided it was ready to go live."

But Slingshot chief executive Mark Callander had major concerns about the system.

"It goes against principles of privacy and freedom from search, it is ineffective for its purpose, and it sets a worrying precedent that a government department can arbitrarily decide to block internet traffic of its choosing."

Callander said it provided a tempting target for hackers.

"The filter provides a single point of failure that is vulnerable to attack. We encourage our customers to use content filtering services to provide protection and this puts them in control."

So far the only ISPs to have signed up to the $150,000 system are Watchdog and Maxnet, who have around 1 per cent of the market share.

A Telecom spokeswoman said it was talking to Internal Affairs about implementing the system.