The Government is injecting $17 million over four years to create a new team dedicated to cracking down on terrorist and violent extremist content online.
In the wake of the March 15 Christchurch terrorist attack that was live streamed on Facebook, the Digital Safety Group within Internal Affairs will be expanded.
It is currently a specialist unit that works to prevent children from abuse online.
The new group is set to see a doubling of investigative, forensic, intelligence and prevention work relating to violent and extremist content.
It is also set to see a strengthening of the Chief Censor's ability to make faster decisions on whether material is harmful, and should bolster laws for swifter responses to violent extremist material.
It aims to look at ways to strengthen laws around social media platforms.
Seventeen people are to be employed by the unit.
Internal Affairs Minister Tracey Martin said the "ease and speed with which the March 15 terrorist attack spread online showed we need to improve our systems to respond just as swiftly".
"While terrorist and violent extremist content is objectionable and therefore illegal under current law, the changes mean we can target this material in a similar way to how we target child sexual exploitation material, by working quickly with online content hosts to remove it as quickly as possible."
Prime Minister Jacinda Ardern said countering violent extremism online "is an important part of our response to the March 15 terrorist attacks".
"Our online world must be a force for good where we can exchange ideas, share technology, and maintain civil liberties, while protecting New Zealanders from objectionable content."