John Whittingdale, the Conservative chairman of the culture, media and sport select committee, on the Surrey police report Press Association

News of the World journalists who hacked Milly Dowler's phone told a string of lies and interfered with the investigation into her disappearance in 2002, according to a report by Surrey police published on Monday.

The report, based on police logs from 2002, depicts a news organisation that tried to bully detectives into backing its own misguided theories, as police searched desperately for clues about the girl who went missing on 21 March 2002.

The file says the reporters were so confident of their own power that they openly admitted the paper had obtained tapes of the voicemails on Milly's phone. Their misinterpretation of the messages then made them mistakenly believe she was still alive.

Rather than tell her family and police of this important information, it appears they concentrated on getting a scoop.

Reporters made calls to an employment agency with which they thought she had registered, and sent what the agency called "hordes" of reporters to harass them. Only on the day immediately before publication did they contact the authorities.

In a month that has already seen the News of the World apologise for hacking three dozen celebrities and crime victims, the Surrey report, released by the Commons culture, media and sport committee, provided further graphic detail of tabloid methods.

John Whittingdale, chairman of the committee, told Sky News it "appears as if they [the News of the World] may have actually interfered or impeded the police in their investigations", adding that "several journalists at the News of the World were involved in hacking the voicemails left on Milly Dowler's phone".

Damian Collins, a Conservative member of the committee, said: "Of all of the documents and evidence that have been produced by our phone-hacking inquiry, this is the most sickening and exposes the black hearts of those involved in perpetrating and covering up this scandal."

Meanwhile, in a separate developmenton Monday, the MP Tom Watson called on police to investigate an instance of email hacking by a Times reporter.

Watson claimed that "perjury and a conspiracy to pervert the course of justice" might have occurred after a Times reporter, Patrick Foster, broke into the email of an award-winning police blogger, – who wrote under the name Nightjack – and subsequently published an article revealing the blogger's identity.

The Surrey police report does not shed any light on the unresolved question of how voicemails came to be deleted from Milly Dowler's phone. Surrey police say the Metropolitan police, which are investigating phone hacking at the News of the World, have still not reached a conclusion. In July, the Guardian reported that the NoW hacked Milly's phone and deleted messages in the first few days after her disappearance in March 2002. After further inquiries, the Metropolitan police suggested in December that while the tabloid did hack Dowler's phone, it was unlikely to have been responsible for specific deletions that caused her parents to have false hopes that she was alive.

The Surrey files have been edited to withhold the names of the journalists, two of whom are currently under criminal investigation by the Metropolitan police's Operation Weeting.

The files describe how the force first learned of interference in the investigation. In mid-April 2002, an employment agency in the north of England, which had no involvement whatever with Milly Dowler, rang to complain. Staff arrived for work "to find hordes of reporters from the News of the World waiting".

The firm said: "We have had a News of the World reporter harassing us today. He says that our agency has recruited Milly as an employee, demanding to know what we know and saying he is working in full co-operation with the police." However, the Surrey report says "the NoW reporter's assertion that he was working with the police was untrue".

The previous day, someone had also rung the agency pretending to be Milly's mother. The files show a NoW reporter subsequently claimed to police that the agency had admitted the 13-year-old was registered for employment with them. This claim also proved untrue.

On 13 April, the police heard from the NoW directly. A journalist demanded "to be put in touch with a senior police officer". He claimed "he had what could be significant information". The journalist disclosed that "the recruitment agency had telephoned the mobile phone number of Milly Dowler [and left a voicemail message] with an offer of work". Police at first thought this story of a voicemail must be the work of a hoaxer. They eventually discovered that it was "a pure coincidence … of no evidential value". The agency had merely rung the wrong number by mistake, and left a message for "Nana", which the reporters had persuaded themselves sounded like "Amanda", Milly's proper name.

But the News of the World refused to accept its story had been knocked down. One reporter insisted that it could not be a hoax because "the NoW had got Milly's mobile phone number and pin from schoolchildren".

The NoW had five reporters working on the story, it told police, and it printed a story in its first edition on 14 April 2002 claiming police were "intrigued" by the alleged new lead.

It quoted verbatim from three voicemails, and gave the impression they had been retrieved by the police themselves.

After protests from Surrey police, the story was modified in later editions to suggest that the employment agency message was merely a hoax.

The paper wrote detailing further voicemail messages it possessed, and demanding police supply more information.

One reporter said "what the Surrey police press officer was telling him was not true and was inconceivable … the NoW was moving its investigation to the north of England, that Milly had been there in person and that she had applied for a job in a factory". The unidentified reporter, whose name has been redacted, said that the NoW "know this 110% – we are absolutely certain".

But according to the newly released report, the NoW's "110%" certainty was simply based on illegal interceptions, a misunderstanding of the facts, and an apparent confidence that police would not dare take action against it for phone hacking.The former NoW journalist Neville Thurlbeck told Channel 4 News last week that he had been acting as news editor at the time of the hunt for Milly. But he said he had not been aware that her voicemails had been hacked by the paper.

The Surrey police flatly contradict the suggestion that they could have been the source of the Dowler voicemails that were published in the News of the World at the time, a claim made both by Thurlbeck and by Tom Crone, a former NoW lawyer, in his evidence to the committee. The police said: "The NoW obtained that information by accessing Milly Dowler's voicemail."

Tom Watson, the former Labour minister who was himself put under surveillance by the NoW, tweeted that the revelations were "utterly stomach-churning".

His Labour colleague Paul Farrelly said: "Apart from the immorality of hacking into Milly Dowler's phone, the letter shows the sheer nerve of the News of the World in feeling able to bully and harangue the police. This was a paper clearly intoxicated with arrogance of its own power."

A News International spokesman said: "The interception of Milly Dowler's phone was shocking and totally unacceptable. The abhorrent nature of what was discovered to have happened at the News of the World ultimately led to its closure last year. The matter is part of a criminal investigation by the Metropolitan police and those who sanctioned or conducted this activity should rightly be held accountable for their actions."Rupert Murdoch broke his Twitter silence on phone hacking on Monday by saying: "No excuses for phone hacking. No argument."

Details of how Foster gained access to Nightjack's email account emerged after News International chief executive, Tom Mockridge, told the Leveson inquiry that a Times reporter was disciplined after gaining unauthorised access to a third-party computer.

Watson claims the high court appears to have been misled when the Times succesfully fought off a legal bid by the blogger to have his name kept secret. The judge in the case ruled in favour of the Times on the basis that information about Nightjack's identity had been come by legitimately.

Mockridge told the Leveson inquiry Foster was later "dismissed following an unrelated incident". Foster has subsequently written freelance articles for both the Guardian and the Daily Telegraph.

Mark Lewis, the Dowlers' lawyer, said: "The release of the Surrey police statement is a further reminder of the relationship between that force and the News of the World. Current investigations are ongoing as to the propriety of that relationship.

"The report indicates that the police force were aware of a caller purporting to be Sally Dowler seeking information in 2002. No doubt there will be current investigations as to who that was as it was not Sally Dowler. The Surrey police have not explained why they did not investigate that deception in 2002.

"No thought seems to have been given to the effect on the Dowler family. The family await the investigation by Lord Justice Leveson about the relationship between police forces and the press."The Dowler family would be grateful if they could now be left alone."