4 July 2011 Last updated at 13:34 ET 
The Guardian has claimed he intercepted messages left by relatives and said the NoW deleted some, which gave her parents false hope she was alive.
NoW parent firm News International said the development was of "great concern".
Mr Lewis said the hacking dated from 2002 when the News of the World was under the editorship of Rebekah Brooks (nee Wade) - now News International's chief executive.
In a statement he said: "Sally and Bob Dowler have been through so much grief and trauma without further distressing revelations to them regarding the loss of their daughter.
'Despicable and evil' "It is distress heaped upon tragedy to learn the News of the World have 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 gave them false hope is despicable."
He also said the Dowlers had been told their own phones were targeted.
The Guardian claims that after Milly's voicemail facility became full, the News of the World deleted messages it had already listened to.
It quotes one source as saying that this gave false hope to friends and family, who mistakenly believed that Milly herself had cleared her message inbox and that therefore she was still alive.
By that time, she had been murdered by a nightclub doorman, Levi Bellfield, who was convicted of the killing last month.
The Guardian also alleges that the News of the World employed another private investigator, Steve Whittamore, to illegally obtain ex-directory numbers for families called Dowler living in Walton-on-Thames, where Milly and her family lived.
A News International spokesman said it had been co-operating fully with the police inquiry into hacking since News International's "voluntary disclosure in January restarted the investigation into illegal voicemail interception".
He said: "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."
Public figures Reacting to the story, Tom Watson MP told the Commons it was a "despicable and evil act that will shock parents up and down the land".
He also said it strongly suggested that parliament was misled in the press standards inquiry that was held by the Department for Culture Media and Sport last year.
Former deputy prime minister Lord Prescott, who claims his phone was also hacked, said the case proved Rupert Murdoch - who owns the News of the World - should not be allowed to purchase the satellite broadcaster BSkyB.
He said: "It's quite appalling; I'm sure people will not believe this could have happened - but it's coming from the police."
In a separate development, a lawyer acting for Colin Stagg has confirmed police contacted him as part of the News of the World phone hacking investigation.
Mr Stagg won more than £700,000 in compensation after being wrongfully arrested over the Rachel Nickell murder.
His solicitor Alex Tribick told the BBC that police had advised Mr Stagg that his name had appeared in documentation associated with the police investigation.
The claims about Milly Dowler are significant in the overall phone hacking inquiry, which has until now focussed largely on the intrusion into the private lives of celebrities.
In January, the High Court will hear claims from five test cases involving public figures who say their phones were hacked into.
They are former footballer Paul Gascoigne, actor Jude Law, sports agent Sky Andrew, interior designer Kelly Hoppen and MP Chris Bryant.
The cases arise out of the disclosure of information by the Metropolitan Police relating to material forfeited by Mulcaire.
He and former News of the World royal editor Clive Goodman were jailed in 2007 over tapping the phones of members of the royal household.
Five alleged victims have reached out-of-court settlements with the newspaper, including celebrity publicist Max Clifford, who received a reported £1m.
Five journalists have been arrested over the allegations.
News of the World 'hacked Milly Dowler phone'
Schoolgirl Milly Dowler went missing nine years ago
An investigator working for the News of the World allegedly hacked into the mobile phone of murdered girl Milly Dowler, a lawyer for the family says.
Mark Lewis said police told her parents that Glenn Mulcaire hacked into her voicemail while she was missing.The Guardian has claimed he intercepted messages left by relatives and said the NoW deleted some, which gave her parents false hope she was alive.
NoW parent firm News International said the development was of "great concern".
Mr Lewis said the hacking dated from 2002 when the News of the World was under the editorship of Rebekah Brooks (nee Wade) - now News International's chief executive.
In a statement he said: "Sally and Bob Dowler have been through so much grief and trauma without further distressing revelations to them regarding the loss of their daughter.
'Despicable and evil' "It is distress heaped upon tragedy to learn the News of the World have 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 gave them false hope is despicable."
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Solicitor for the Dowlers, Mark Lewis: "It is distress heaped upon tragedy"
The Guardian claims that after Milly's voicemail facility became full, the News of the World deleted messages it had already listened to.
It quotes one source as saying that this gave false hope to friends and family, who mistakenly believed that Milly herself had cleared her message inbox and that therefore she was still alive.
By that time, she had been murdered by a nightclub doorman, Levi Bellfield, who was convicted of the killing last month.
The Guardian also alleges that the News of the World employed another private investigator, Steve Whittamore, to illegally obtain ex-directory numbers for families called Dowler living in Walton-on-Thames, where Milly and her family lived.
A News International spokesman said it had been co-operating fully with the police inquiry into hacking since News International's "voluntary disclosure in January restarted the investigation into illegal voicemail interception".
He said: "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."
Public figures Reacting to the story, Tom Watson MP told the Commons it was a "despicable and evil act that will shock parents up and down the land".
He also said it strongly suggested that parliament was misled in the press standards inquiry that was held by the Department for Culture Media and Sport last year.
Former deputy prime minister Lord Prescott, who claims his phone was also hacked, said the case proved Rupert Murdoch - who owns the News of the World - should not be allowed to purchase the satellite broadcaster BSkyB.
He said: "It's quite appalling; I'm sure people will not believe this could have happened - but it's coming from the police."
In a separate development, a lawyer acting for Colin Stagg has confirmed police contacted him as part of the News of the World phone hacking investigation.
Mr Stagg won more than £700,000 in compensation after being wrongfully arrested over the Rachel Nickell murder.
His solicitor Alex Tribick told the BBC that police had advised Mr Stagg that his name had appeared in documentation associated with the police investigation.
The claims about Milly Dowler are significant in the overall phone hacking inquiry, which has until now focussed largely on the intrusion into the private lives of celebrities.
In January, the High Court will hear claims from five test cases involving public figures who say their phones were hacked into.
They are former footballer Paul Gascoigne, actor Jude Law, sports agent Sky Andrew, interior designer Kelly Hoppen and MP Chris Bryant.
The cases arise out of the disclosure of information by the Metropolitan Police relating to material forfeited by Mulcaire.
He and former News of the World royal editor Clive Goodman were jailed in 2007 over tapping the phones of members of the royal household.
Five alleged victims have reached out-of-court settlements with the newspaper, including celebrity publicist Max Clifford, who received a reported £1m.
Five journalists have been arrested over the allegations.
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