The parents of murdered schoolgirl Milly Dowler are suing the News of the World over claims a private investigator working for the newspaper hacked into her phone after she went missing.
Bob and Sally Dowler said they had been given “false hope” their daughter could still be alive after voicemail messages on the phone were deleted in the days after she vanished.
Solicitor Mark Lewis said the “heinous” and “despicable” actions could have jeopardised the police investigation.
Scotland Yard officers contacted Mr and Mrs Dowler about the hacking allegations in April, a month before Levi Bellfield went on trial for her murder.
News International, the publisher of the newspaper, said the allegations were of “great concern” and said it would be conducting its own inquiry.
Private investigator Glenn Mulcaire is alleged to have illegally accessed Milly’s phone messages after she was abducted by Bellfield as she walked home from school in Walton-on-Thames, Surrey, in March 2002.
The voicemail messages were allegedly deleted to make room for more after Milly’s inbox became full.
Lewis, from London-based Taylor Hampton Solicitors, said: “It is distress heaped upon tragedy to learn that the News of the World had no humanity at such a terrible time.
“The fact that they were prepared to act in such a heinous way that could have jeopardised the police investigation and give them false hope is despicable.”
He added that Mr and Mrs Dowler were pursuing a claim for damages against the News of the World.
Lewis said the Dowlers had been told their own phones had been targeted, as well as that of their daughter.
Mulcaire and former News of the World royal editor Clive Goodman were given jail terms in January 2007 after the Old Bailey heard they plotted to hack into royal aides’ telephone messages.
At the time of Milly’s disappearance Andy Coulson, who resigned in January as Prime Minister David Cameron’s media adviser, was the News of the World’s deputy editor while Rebekah Brooks, now Rupert Murdoch’s chief executive in the UK, was the editor.
Bellfield, 43, was given a second whole life jail term last month for 13-year-old Milly’s murder.
But her parents said they felt as though they themselves were “put on trial” by his defence, which saw them face intrusive questioning about their family life in the witness box.
A fresh inquiry into phone hacking was launched by Scotland Yard in January which has seen five people arrested.
Responding to the Dowler family allegations, a News International spokesman said: “We have been co-operating fully with Operation Weeting since our voluntary disclosure in January restarted the investigation into illegal voicemail interception.
“This particular case is clearly a development of great concern and we will be conducting our own inquiries as a result. We will obviously co-operate fully with any police request on this should we be asked.”
Labour leader Ed Miliband said: “I am shocked by the news of the hacking of Milly Dowler’s phone.
“It beggars belief that anyone would undertake such a cruel and immoral act.
“The police inquiry must get to the bottom of who was responsible for this and who was complicit in it.”
It has also emerged that police have contacted Colin Stagg, the man cleared of murdering Rachel Nickell, and entrepreneur Sir Richard Branson to tell them they may have been victims of News of the World phone hacking.
Detectives have told Stagg his phone was hacked in 2000, six years after a judge at the Old Bailey threw out the case against him, his solicitor Alex Tribick said.
Tribick added: “From my understanding, this is linked with the year 2000, which I believe is the earliest date of anybody so far.”
Stagg and his lawyer have yet to meet officers from Operation Weeting but they are planning to make a civil claim for compensation.
Branson also suggested he would pursue a claim for damages, to be donated to charity.
A number of celebrities are pursuing litigation against the News of the World in the High Court.
They include ex-footballer Paul Gascoigne, actor Jude Law, sports agent Sky Andrew, interior designer Kelly Hoppen and MP Chris Bryant.
Others, among them actress Sienna Miller and football pundit Andy Gray, have already settled with publishers News Group Newspapers.