It is understood a sophisticated listening device was found in the All Blacks' team room at their Intercontinental Double Bay hotel on Monday ahead of the Bledisloe Cup opener on Saturday.

Police confirmed the object was located in a chair, while a report in the New Zealand Herald stated: "Foam of the seat appeared to have been deliberately and carefully cut to make way for the surveillance device and then sewn or glued back together to be almost undetectable."

Rose Bay Local Area Commander Superintendent Brad Hodder said the matter was under investigation, however the time it took for police to be notified was not ideal.

"We've started an investigation as to what that device is," Hodder said. "A delay in any investigation is always tough but we'll look at that information and treat it accordingly. Any offence is serious; we will be looking at all the avenues."

Asked whether he had ever seen such a device in his time, Hodder replied: "I personally haven't, no."

New Zealand Rugby confirmed an investigation was underway with NZR chief executive Steve Tew saying: "A listening device was found in a meeting room this week during a routine security check."

Tew later told reporters on Saturday the device could have picked up secret team discussions, however he was not prepared to point the finger at anyone just yet. 

'Ludicrous concept': Bill Pulver is incredulous a listening device has been found. Photo: Christopher Pearce

"There was an All Blacks team meeting there earlier in the week," Tew said. "If the device was working properly – and we don't know that for sure – then they would have overheard that [information]. But we don't think it's a catastrophic issue for the game. We're going to get on with it.

"We haven't made any accusations of anybody, so there's no room for denials."

ARU chief executive Bill Pulver told the New Zealand Herald there was no way the game's governing body had anything to do with the device.

"Look, I have literally just seen a note from Steve Tew telling me about this ... the two unions have agreed to hand the matter over to the police," Pulver said. "Mate, of course [the ARU is not involved]. It is completely ludicrous. I just think it's a ludicrous concept that there are listening devices being placed in team rooms. I don't know how that could happen.

"I'm utterly disappointed the story would break on match day [Saturday] and frankly, that's all I've got to say. We will deal with this matter after the rugby. I simply don't know the background but I'm clearly disappointed it gets out to the media on the day of a Bledisloe Cup match."

The ARU did not want to make further comment on the matter, while the Intercontinental Hotel in Double Bay did not return Fairfax Media's request for comment.

The allegations are incredibly serious for the sport with ramifications expected to be far-reaching, particularly on the eve of the Bledisloe Cup opener.

According to Australian federal law: "Generally, it is an offence to knowingly install, use or cause to be used, or maintain a listening device to record a private conversation, whether or not the person is a party to that private conversation."

However, NSW Premier Mike Baird did not seem too concerned by the criminal offence being investigated by police, saying he was just happy the Wallabies might gain an advantage over their New Zealand rivals.

"I think that's awesome," Baird said. "If that gives us a chance to beat the All Blacks, I'm all for it."

There is no suggestion the Wallabies were involved in the matter being investigated.

The State Surveillance Branch will use security footage from the hotel to see if someone planted the device.

Whoever was responsible would have had to have known when and where the All Blacks were having their team meeting, information that is not public knowledge.

There are many possibilities as to what has happened, and while highly speculative, one theory being thrown around is the recording device was meant for someone staying at the hotel before the All Blacks arrived on Sunday last week.

With Georgina Robinson

Know more? Email tom.decent@fairfaxmedia.com.au