The US Department of Justice and the Toronto Police have busted a major child pornography network, leading to the arrest of 27 individuals in England, the US, Canada and Australia.

US Attorney General Alberto Gonzales said at a press conference that undercover investigators had infiltrated an internet chat room being used to trade images of child pornography.

The content included live streaming video of adults sexually molesting children and infants.

"The behavior in these chat rooms, and the images many of these defendants sent around the world through P2P file sharing programs and private IM services, are the worst imaginable forms of child pornography," said Gonzales.

"This investigation is an example of how American law enforcement can and will work side-by-side with our international law enforcement partners to shut down these rings and protect young, vulnerable victims from the horrors of sexual abuse."

Gonzales added that those arrested had not yet been convicted, but that the department intended to prosecute them and others engaged in similar practices " to the fullest extent of the law".

Seven of the abused children have been identified and rescued, one as young as 18 months old. One chat room member who called himself 'Acidburn' had streamed live abuse over the internet.

The US hosts 40 per cent of the world's child pornography, according to figures released last week by the Internet Watch Foundation (IWF). Russia was the second most used country, hosting over a quarter of such images. 

Peter Robbins, chief executive of the IWF, praised US internet providers for reacting promptly when notified and taking down sites and message boards hosting such content.

He added that so much content is posted in the US because of the country's freedom of information laws.

"It is difficult to see abusing children as freedom of speech," he said. " Most US ISPs will take content down, but there's a huge amount of work to do in Russia."