Cocaine worth $10 million has been found hidden inside a large diamante-encrusted horse head in a record seizure of the drug in New Zealand.

Customs officers in Auckland discovered 35 bricks of the narcotic concealed within the bejewelled 880-pound sculpture, which had arrived in the country from Mexico.

Three men - two Mexicans and an American - have been arrested in connection with the biggest ever haul of the drug in New Zealand.

Importation of the drug carries a life prison sentence.

Detective Senior Sergeant Colin Parmenter of Auckland's organised crime unit said: "This is obviously an extremely large amount of cocaine, and in the past we’ve only found very small amounts of this drug.

"What this find tells us though is that there is obviously a demand for it.

"While it's possible that this statue may have been sent on to another country, but there’s every possibility that the cocaine was destined for the New Zealand market and we would be naive to think otherwise."

Further arrests have not been ruled out by police.