The Internet Watch Foundation said the images were among 4,300 items referred to in 781 complaints.
As IWF published its first annual report on Tuesday, the Government was announcing a review of the group's work.
The IWF was launched in 1996 with the role of tackling illegal material on the net.
The Department of Trade and Industry now intends to extend the group's work.
DTI minister Barbara Roche MP said: "The Government is not complacent about illegal and harmful material on the Internet.
"We intend to uphold the law on-line as we do off-line.
"We are very pleased with the progress the IWF has made in its first year but we want to keep up the momentum."
The group's first annual report shows that up to 95% of the 2,000 items removed as a result of IWF action contained images of children engaged in sexual activity.
But the IWF accepts that the removals represent only "a very small proportion" of the total available on the Internet.
Chairman David Kerr said: "We recognise that we are not getting all the material but we do have a better idea of where it is coming from."
Mr Kerr said work so far suggested that just 6% of such illegal material originated from British Internet sites, compared with 63% from the US.
As well as increasing its monitoring role, the IWF is seeking to create a ratings and filter system for Internet sites which would allow parents to restrict what their children were able to view.
Mr Kerr said the IWF has drawn up detailed proposals for such a system and was working with groups in Europe, Australia and the US in an attempt to create an international standard.
The IWF report said complaints from the public had resulted in a number of prosecutions in Britain.
Exact numbers are not known as police records do not differentiate between child pornography posted on the Internet and that which is produced through more traditional means.
Crackdown on Internet porn
(26 Feb 98 | UK)
Internet Watch Foundation
World Congress Against Commercial Sexual Exploitation of Children
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