The number of websites showing and selling images of child abuse has fallen in the last 12 months.
The number of sites hosting such images dropped by 10% in 2008, reveal figures from the Internet Watch Foundation.
The watchdog warned that the fall in numbers masked a rise in the severity of images seen on the remaining sites.
"These websites, although reducing in number, represent an extremely serious problem," said Peter Robbins, chief executive of the IWF.
Of the 1,536 unique domains known to the IWF as hosting images of child abuse, 74% were run for profit. The remaining sites were places abusers shared or swapped images.
In its report, the IWF said: "1,536 domains represent a problem of a scale which can be seriously targeted and significantly disrupted through international efforts."
It said that about 69% of the children depicted in the images it saw were between zero and 10. About 24% involved children aged six or under. About 58% of the images seen showed the most serious sorts of abuse - involving rape or torture.
Further analysis showed that a small number of registries and registrars of domain names accounted for the vast majority of sites selling images of abuse. Five registries alone were behind 55% of the sites the IWF knew about.
Registries are effectively the telephone directories for the internet and look after specific domains, such as .com. Registrars sell names associated with a particular domain to populate the directories the registries look after.
The IWF said it and its international partners would target these key domain sellers in the next year to get abuse sites delisted and removed from the net.
The report also noted the increasing sophistication of the methods used by site owners to escape detection and avoid being shut down.
Many sites scramble domain names, hide payment systems and split images across sub-domains or remote servers to evade law enforcement agencies.