Aspartame is a sweetener used in about 6,000 consumer foods and beverages, including soft drinks and a condiment.
While scientific bodies, including the International Agency for Research on Cancer (IARC), have classified formaldehyde as carcinogenic to humans, low levels are thought to be harmless.
Aspartame itself is subject to scrutiny due to its possible connection to illnesses, including brain tumors.
The official statement follows claims about the risks in consuming the sweetener by Steffan Browning, spokesperson for Soil & Health posted on the organisation's website on this week.
"Formaldehyde produced in children's bodies from the aspartame in diet drinks, some chewing gum and cereals and many processed foods, is likely to be an even greater health hazard than that in the unregulated clothing market," said Browning.
"Cancer and many other health issues come from the junk additives that the regulated food industry is allowed to use."
Formaldehyde is also sometimes added inappropriately in food processing for its preservative and bleaching effects.
Soil & Heath alleged the potential risks about the by-product following a recent announcement by the New Zealand Ministry of Consumer Affairs that an urgent investigation is testing formaldehyde in clothing, while other countries responses to the chemical are being examined.
"However, the same sort of concern should be shown by the New Zealand Food Safety Authority, the Prime Minister, Health and Food Safety Ministers, and the legions of scuttling bureacrats around the formaldehyde being swilled down in the schools and streets of New Zealand in diet drinks and chewing gum," said Browning.
John Reeve, expert toxicologist at NZFSA, said that there many foods where formaldehyde is naturally produced as part of normal digestion, while tomatoes and citrus fruits produce far more than aspartame, at levels not at all harmful.
"If these reports didn't get taken seriously by some people they would be laughable," he said.
"However, people could be put off artificial sweeteners in favour of sugar, with its associated known contribution to obesity, diabetes and similar."
Reeve said that worldwide science was uncontested that aspartame is safe for everybody, apart from those few people with the rare metabolic phenylketonuria (PKU) disorder.
As a result products containing aspartame must be labelled to assist them to control their level of phenylalanine.
"Furthermore, claims saying that aspartame leads to unsafe levels of formaldehyde in people are just ridiculous," he said.
NZFSA scientists say that aspartame is metabolized in the human body.
The formaldehyde produced is converted to formate.
"The key information that is missing from the highly misleading Soil & Health claim is that the levels of ingestion are very small," Reeve said.
The World Health Organization (WHO) has established a Tolerable Daily Intake (TDI) of 0.15mg/kg body weight for the chemical.
The TDI is the estimated amount of a substance that can be ingested daily, on body weight basis, over a lifetime without appreciable risk.
"New Zealanders can be assured that NZFSA takes its government mandated mission to protect human health seriously," Reeve said.