Immigration officers are also still trying to find 144 Chinese students in New Zealand on fraudulent student visas. At least eight others were found working in a vineyard in Blenheim, despite being enrolled in Auckland schools.
Mr Elms said he agreed with the AUT survey's finding that horticulture was an easy target for employers, labour contractors and private training establishments (PTEs) trying to cheat the system.
He said Immigration NZ had already started making inquiries after receiving information about potential student visa fraud.
It also wanted to tackle any risks in the Government's announcement last September that it planned to double the value of international education - the country's fifth biggest export earner - to $5 billion in the next 15 years.
Planned action against the worst offenders had been interrupted by an inquiry into how 299 student visas were fraudulently issued through Immigration NZ's Beijing office. Information from that inquiry would be used to target PTEs in the illegal labour investigation.
Mr Elms said most of the schools under investigation had a mix of apparently legitimate students and others abusing the system.
"I think there may well be some directors or operators of PTEs out there that use what is a legitimate business for illegitimate reasons.
"One would have to look at those particular businesses to say, is this a facade for facilitating illegal work?"
He said many of the students involved did not set out to cheat the system but ended up working illegally because they did not have enough money to support themselves or pay debts.
The biggest and most organised exploitation seemed to occur in horticultural work, such as kiwifruit picking and packing.
Other students were clearly being underpaid in ethnic restaurants but he was not convinced this was occurring on an organised basis.
Asked about claims within the industry that many Chinese and Thai women used student visas to work as prostitutes, he said some students willingly took up prostitution to support themselves while they completed their courses.
"There's less evidence to say that people are getting student visas as a cover to work in the sex industry," he said.
Mr Elms said the illegal labour scam was confined to "a few unscrupulous characters" among schools and contractors and was not typical of the 260-plus PTEs involved with international students.
The New Zealand Qualifications Authority, which monitors the PTEs' performance, has a similar watchlist of about 26 suspect schools.
An industry source said the number represented about half the Auckland-based PTEs at the lucrative end of the export education business - those which offered tertiary courses in business, IT, cookery and hospitality to the big Chinese and rapidly growing Indian markets.
