The News of the World's publishers inquired about the price of obtaining information about the young children of a lawyer for alleged phone-hacking victims, the Leveson Inquiry heard today.
Charlotte Harris described seeing documents that revealed how she was put under surveillance by News Group Newspapers (NGN) and contained private details about her family.
She said it was natural as a mother to feel "terribly uncomfortable" about the idea of people investigating her children, who were aged two and four at the time.
Ms Harris, who represents alleged hacking victims including Ulrika Jonsson, former Lib Dem MP Mark Oaten and sports agent Sky Andrew, said she was given an insight into her clients' lives after learning a private detective had spied on her.
"One of the difficulties with surveillance, and I hear this from clients but I also speak for myself, is you don't really know what happened when," she said.
"It is what you don't know that can cause stress. That in itself might be a new form of harassment to look into."
The media lawyer, of leading London firm Mishcon de Reya, told the inquiry into press standards she first learned in May that she had been placed under surveillance.
She contacted Simon Greenberg, director of corporate affairs for NGN's parent company News International, who in September informed her that he had uncovered more papers relating to what happened.
Ms Harris said in a witness statement: "The documents contain comments on my private life and that of my family, for example private information contained within an email from (NGN solicitor) Julian Pike to a private investigator in May 2010, and further emails about the price of obtaining information relating to my children, then aged two and four.
"There can be no justification for this conduct. The motive was to attempt to discredit those solicitors who were conducting the phone-hacking cases.
"The reports were prepared in order to find a way of stopping us acting in these cases."
The inquiry heard that NGN suspected Ms Harris and fellow media lawyer Mark Lewis of exchanging confidential information gained by acting for Professional Footballers' Association chief executive Gordon Taylor in his civil damages claim over the hacking of his phone by the now-defunct News of the World.
Ms Harris strongly denied this suggestion, adding: "They were not keen on the fact that having done a phone hacking case, that we should continue to do phone hacking cases."
She questioned why NGN did not complain to her, her law firm or the Law Society if they had concerns about her conduct.
"To take out surveillance on me and my kids or family members, to find out which of my siblings I lived with in what year - that kind of information, I don't see how that can possibly help them," she said.
She also said that Tom Crone, the News of the World's former head of legal, was "absolutely wedded" to the defence that phone hacking at the News of the World was limited to a single "rogue reporter".
Clive Goodman, the paper's former royal editor, was jailed along with private investigator Glenn Mulcaire in January 2007 after they admitted intercepting voicemail messages left on royal aides' phones.
Ms Harris said: "It was always Tom Crone's position that apart from in this case where there had been one rogue reporter, there was no evidence."
Meanwhile, a Guardian journalist today defended his hacking of an arms company executive's phone as "perfectly ethical".
David Leigh, the paper's investigations executive editor, admitted in an article published after Goodman pleaded guilty in December 2006 that he felt a "voyeuristic thrill" in listening to the voicemail messages.
He wrote: "I, too, once listened to the mobile phone messages of a corrupt arms company executive - the crime similar to that for which Goodman now faces the prospect of jail.
"The trick was a simple one: the businessman in question had inadvertently left his pin code on a print-out and all that was needed was to dial straight into his voicemail.
"There is certainly a voyeuristic thrill in hearing another person's private messages.
"But unlike Goodman, I was not interested in witless tittle-tattle about the royal family. I was looking for evidence of bribery and corruption.
"And unlike the News of the World, I was not paying a private detective to routinely help me with circulation-boosting snippets."
Giving evidence to the Leveson Inquiry today, Mr Leigh said: "I don't hack phones normally. I have never done anything like that since and I had never done anything like that before.
"On that particular occasion, this minor incident did seem to me perfectly ethical."
Mr Leigh said he would prefer it if there was an explicit public interest defence to the criminal offence of illegally intercepting communications.
But he suggested that the director of public prosecutions (DPP) would not in practice have brought charges against him.
He told the inquiry: "I like to think that if the incident I have described there came to the attentions of the DPP, and I was asked about it, the DPP would conclude that there was no public interest in seeking to prosecute me or another person for doing something like that.
"That is a backstop that the law has to stop it making an ass of itself."
Mr Leigh added: "A journalist ought to be prepared to face up to the consequences of what they have done.
"If I do something that I think is OK in the public interest, I have to be prepared to take the consequences."
The inquiry also heard today from Steven Nott, who said he tried to warn the authorities about phone hacking in 1999.
Mr Nott, a delivery driver from Cwmbran, South Wales, discovered how easy it was to access other people's voicemails remotely when he needed to pick up messages from customers while Vodafone's network was down.
He contacted the mobile phone company, who informed him he could pick up his voicemails by phoning his own mobile number and entering a default PIN number.
Mr Nott told the inquiry: "I thought to myself, 'this is insecure' straightaway.
"I then said to the lady at customer services, 'If this is the case, I could ring anybody's phone up using the same method and access their voicemail'.
"She said: 'Yes, you could, but you're not supposed to'."
Mr Nott said he told journalists at the Daily Mirror and The Sun about the security loophole, but they did not run stories.
He said he also contacted official agencies including Scotland Yard, MI5, the Home Office, the former Department of Trade and Industry, and the former HM Customs and Excise, but none of them replied.Film director Chris Atkins told the inquiry how his team planted invented celebrity stories in tabloid papers for his 2009 documentary Starsuckers.
He said: "We called them up, we gave them fantastical lies, and they wrote them down and put them in their newspapers the next day without anyone calling up and asking anyone whether or not it might be true."
Mr Atkins also sent out fake press releases - including one for an invented "chastity garter" that texts a woman's partner when she becomes sexually aroused - which were picked up by national newspapers, the hearing was told.
Prime Minister David Cameron set up the Leveson Inquiry in July in response to disclosures that the News of the World commissioned Mulcaire to hack murdered schoolgirl Milly Dowler's phone after she disappeared in 2002.
The first part of the inquiry, sitting at the Royal Courts of Justice in London, is looking at the culture, practices and ethics of the press in general and is due to produce a report by next September.
The second part, examining the extent of unlawful activities by journalists, will not begin until detectives have completed their investigation into alleged phone hacking and corrupt payments to police, and any prosecutions have been concluded.