From unprintable curse word to cuddly children’s toy: that has been the voyage charted by an imaginary beast invented by Chinese internet users to poke fun at a new nationwide crackdown against online content deemed vulgar.

The saga of the “Grass Mud Horse” is in fact one of the many puns in which the Chinese language is so rich. It began at the start of the year when China’s cyberpolice launched a campaign to cleanse pornographic and other content regarded as unseemly from sites viewed by the world’s largest online population.

What began as an entertaining by-product of that internet clean-up has become a sensation. This is because “Grass Mud Horse” in Chinese is a homonym for an unprintable but widely used phrase. Both the phrase – “F*** your mother” – and the name of the mythical animal are pronounced as caonima, although using different tones.

The identity of the creator of the Grass Mud Horse remains a mystery, but he – or she – has sparked a mini-industry.

The tale now goes that in the desert of “Male Gebi” – a homonym for yet another unprintable curse that means “Mother’s C***” – lives a herd of special alpaca-like animals known as the Grass Mud Horse. The idyllic existence of the caonima is under threat from a migration of river crabs. The resilient and intelligent caonima fight back to defeat the river crabs – yet another play on words. The pronunciation of river crab resembles “harmony” – a favourite slogan of the current Communist Party leadership. It has become common practice among internet writers whose posts have been deleted to say they have been “harmonised” – or “eaten by the river crab”. Thus “river crab” has become a code name for internet censors.

By the end of February, the censors had closed nearly 3,000 websites and 270 blogs regarded as containing “vulgar or pornographic” content. However, many anti-establishment sites or blogs have also fallen foul of the “harmonisation”, including the well-known Bullog.com and many current affairs discussion groups hosted on Douban.com.

The craze for the caonima among Chinese internet users has spawned a video on Youtube that had received more than 1.3 million hits by today. Saccharine children’s voices sing along with astonishing vulgarity – or innocence – depending on the pronunciation of the words.

A translation of one verse of the song, by China Digital Times, goes:

“Oh lying down Grass Mud Horse

Oh running wild Grass Mud Horse

They defeated river crabs in order to protect their grassland

River crabs forever disappeared from Ma Le Desert”

Another video widely viewed online is a spoof of a state television nature documentary in which a presenter introduces the caonima in its natural habitat, complete with footage of furry alpacas on mountain slopes.

The use of homonyms to bypass the Great Firewall of China is hardly new, but this cute new animal, the caonima, has achieved unprecedented success. It even boasts its own entry on the Chinese equivalent of Wikipedia.

The animal has even made its way into the state-run media. The Southern Metropolis Daily, one of the few more daring newspapers in China, this week ran a story detailing – in print – how two caonima toys have become hot items. Called Ma Le and Ge Bi, the cuddly animals were designed by five young people in southern Guangdong province as members of the caonima family. The first 150 went on sale online this week at 39.9 yuan (£4) each and demand has been high.