Children as young as eight are being sexually blackmailed online by paedophiles, with some taking their own lives as a result.
Research by the Child Exploitation and Online Protection (CEOP) centre found that children are in some cases forced to perform slave-like sex acts live on webcam by abusers who threaten to share naked pictures of them if they do not comply.
In other cases, abusers had their victims write degrading statements on their bodies or cut themselves while being filmed.
Over the past two years, CEOP found that 424 children have fallen victim to online sexual blackmail, with 184 of these from the UK.
During this period, seven children, including one from the UK, took their own lives, while seven more seriously self-harmed or attempted suicide.
Researchers found offenders normally pretend to be a child online to gain their victims' trust and get sexual images of them. They then use this as ammunition to blackmail children into further abuse, saying they will send the images to their friends and families if they do not do as they are told.
One paedophile had a folder on his computer entitled 'slaves' containing a collection of images of children he had amassed.
CEOP found offenders normally approach their victims in open chat sites and social networks, before steering them into private areas where conversations become sexual. In some cases, the offenders ask for cash as well as more indecent images.
Andy Baker, deputy chief executive at CEOP said: "These offenders are cowards. They hide behind a screen, and in many cases make hollow threats which they know they will never act on because by sharing these images will only bring the police closer to them.
"However, our research shows that the power offenders use on their victims means children who are forced into performing acts on webcam or sending pictures can feel trapped, and some tragically go on to self-harm or in the worst cases take their own lives.
"The stories we hear are truly tragic and you cannot help but be touched by the emotional rollercoaster these youngsters must be going through."
As a result the NSPCC has now set up a dedicated helpline to tackle online blackmail and sexual abuse.
"The centre is also working closely with law enforcement around the globe to catch child sex abusers," Baker added. "We are using the latest technology and intelligence to ensure that no matter where in the world they are or no matter which parts of the web they are using, we will find them and we will catch them."