German prosecutors have launched an investigation to track down anonymous participants of the virtual computer game Second Life who are reportedly buying sex with other players who pose as children, as well as offering child pornography for sale.

Investigators in the city of Halle are acting on specific information about a German Second Life player, or avatar, who put child pornography images up for sale and paid for sex with underage players or players posing as minors.

"We are trying to find out the identity of this person," chief prosecutor Peter Vogt from the Central Office against Child Pornography told German television. "I am lost for words. What is being offered is nothing short of child pornography."

Nick Schader, a reporter with the investigative television programme Report Mainz, and a member of Second Life, said he had been "shocked to see" the virtual child pornography meetings, to which he was invited for 500 Linden dollar - around £1.50. He said the same group of people subsequently put him in touch with traders in real child pornography.

Robin Harper, the deputy president of the San Francisco firm Linden Lab that runs Second Life, said: "We will find out who is behind this, and then inform the police." He said that Linden Lab also planned to introduce an age control system.

While in the United States "virtual" child pornography is not a crime, in Germany it is punishable by three months to five years in prison.

Under 18-year-olds are banned from taking part in Second Life, but critics say in reality it is impossible to check the ages of participants because of the virtual nature of the game.

Some players choose to dress up as child figures, but with no sexual motivation, purchasing "skins" to make them look like minors, but that do not as a rule depict the private parts of the body. There are even adoption agencies that offer lonely "children" the chance to have a virtual family.

But the established Second Life practice of so-called "Age Play", in which players request sex with other players who dress up as child avatars, has encouraged a growth in players posing as children in order to make money.

It has already attracted much criticism both from inside and outside the imaginary world. Child protection agencies say it has encouraged people with paedophile tendencies to play out their darkest fantasies and could have a knock-on effect in the real world. Bestiality, or sex with animals, is becoming increasingly popular on the site, which now has over six million players and is growing by an average of 800,000 a month. Germans make up the largest single representation of any country, with 209,000 members.