The cellphone phenomenon was last year responsible for 32 Victorian teenagers being charged with child pornography offences.
Cyber-bullying expert Kate McCaffrey warns that most parents remain oblivious to the threat to children, while school principals describe phone-based bullying as "explosive".
The full extent of sexting has not been quantified, but a survey by a teenage girls' magazine found 40 per cent of respondents had been asked to send sexual images of themselves.
Police say sexting rates are already high, while Kids Help Line says nearly half their bullying-related calls can be attributed to cyber-bullying.
Detective Sergeant Campbell Davis, of the Victoria Police internet child exploitation team, said girls were especially targeted, and the third-generation of mobile phone technology, or 3G, which can send large image files straight to the internet, was exacerbating the problem.
"It is a very powerful technology and we need to teach our children how quickly images can be forwarded," Sydney Morning Herald quoted him, as saying.
Any image that depicts a minor in a sexual activity or indecent manner is considered child pornography, and anyone who passes on or receives those images is liable to face criminal charges.
A survey by Girlfriend magazine found that four in 10 readers had been asked to forward a nude photo of themselves.
Fred Ackerman, president of the Victorian Principals Association, said schools could confiscate mobile phones but could not stop torrents of text messages.