Police in Canada say 348 people have been arrested and nearly 400 children rescued during a three-year investigation into child pornography.

At the center of the inquiry was a Toronto-based firm that allegedly sold DVDs and streamed videos of naked children.

Azov Films marketed the footage as “naturist” and claimed it was legal in Canada and the US.

The films were distributed in 94 countries, police said.

In Canada 108 arrests were made, with another 76 in the US and 164 in other countries during the investigation codenamed Project Spade.

Inspector Joanna Beavan-Desjardins, from Toronto police, said the number of suspects who had close contact with children was of particular concern to investigators.

Doctors, school teachers, foster carers and priests were among those detained, she said.

The head of Azov Films, identified as Canadian Brian Way, 42, has been in custody since his arrest in May 2011, following an undercover operation.

He is accused of paying people to film the children and has been charged with 11 offenses.

The company has been shut down.