The Department of Internal Affairs says media regulations are out of date, riddled with holes and do not properly cover online platforms.
It has today released a draft plan to make traditional and online media subject to the same content rules.
Department of Internal Affairs policy group general manager Suzanne Doig said the current oversight legislation was decades old and ineffective.
"New Zealanders have told us many times that they are experiencing harm from the content that they and their families consume.
"The existing measures and safeguards are not fit to deal with this."
The current system was complicated and led to bizarre situations, for example, the exact same material was subject to different rules depending on where it played.
"We have completely different approaches for managing content broadcast on free to air television versus content that is on commercial video on demand platforms."
Chief censor Caroline Flora said her office worked under 30-year-old legislation.
"What we are seeing in the internet age is an explosion of content. We do what we can, but our tools are no longer fit for purpose."
Broadcasting Standards Authority acting chief executive Helen Cruse said the public found the current process for making complaints incredibly confusing.
She said one in five people who approached the BSA has an issue that it actually did not have jurisdiction over.
"We do get [angry, frustrated] people on the phone because they are coming to us with a problem and we can't help.
"It shouldn't be like that, it should be straightforward, there should be one place you go."
Doig said DIA has been in talks about the changes with the large offshore social media companies.
The proposal could see them change their algorithms so controversial material would be suggested less often.
They could also have to put warning labels on more explicit content.
But questions remained about the specifics of making tech giants like Facebook and Twitter comply with the new rules.
The proposed reforms would bring the regulation of traditional and social media under one framework, to be overseen by a new independent regulator.
Doig promised that regulator would be at arms length from the government, and would have no power over individual editorial decisions about legal content.
"There [is] simply not the mechanism in the system that we're proposing for a new regulator to lean over to one of the news broadcasters and say 'take that down'."
Self-regulatory industry bodies like the Media Council could be carried over into the new system, with possible higher standards required than under the current regime.
The public have until the end of July to give their input, with the proposal to go to the government after that.