I've finally been able to fix this problem after taking over day to solve.
After speaking to some people on another forum who directed me to this post i though i would leave a message on how solve this issue:
1) Download the source code & examples from http://www.icsharpcode.net/OpenSource/SharpZipLib/Download.aspx
2) Unzip and open ICSharpCode.SharpZLib.sln
3) Under ICSharpCode.SharpZLib open AssemblyInfo.cs & add [assembly: AllowPartiallyTrustedCallers] with using System.Security;
Then rebuild the project, you get some errors this is due to the examples bit I just deleted that selection.
4) Open up the SharpZipLib folder and your now find a Bin folder and inside that will be a new ICSharpCode.SharpZipLib.dll.
5) Copy that into your web application & zip away
And that's how i resolved this security exception. Hope it helps some one
Chrismogz :-)