Chat show host Morgan previously told the inquiry he listened to a voicemail message left to Heather Mills by Sir Paul, but refused to say when or where he heard it because he wanted to protect a "source".
Ms Mills said she had never authorised Morgan, or anybody, to access or listen to her voicemails, and neither had she ever played a recording to the former editor.
"I couldn't quite believe that he would even try to insinuate, a man that has written nothing but awful things about me for years, would relish in telling the court if I had played a voicemail message to him,"
she said.
Ms Mills told the inquiry that in early 2001 she and Sir Paul had
argued about a trip she was planning to Gujurat, India, and while she stayed with a friend in Middlesex he left her a series of voicemails.
"In the morning, when I woke up, there were many messages, but they were all saved messages which I did not quite understand, because normally they wouldn't be but I didn't think too much of it," said Ms Mills.
"I thought I must have pressed a wrong button.
"There were about 25 messages all asking for forgiveness of what had happened.
"One of them said, 'please forgive me' and sang a little ditty of one of his songs on the voicemail.
"So that afternoon I went back and all was forgiven."
She told the hearing she never recorded the messages and deleted them straight away.
She was then called by a former Trinity Mirror employee - not a Daily Mirror journalist, nor anybody working under Morgan - saying they had heard the message.
"I said, 'there's no way that you could know that unless you have been listening to my messages'," she told the inquiry.
She said she threatened to take legal action if the story was published, and it was not at the time.
But in 2006, in a piece in the Daily Mail, Morgan referred to having listened to the message.
Giving evidence in December, Morgan told the inquiry he would not disclose the source who played him a tape of the message.
"I am not going to discuss where I heard it or who played it to me.
"I don't think it's right. In fact, the inquiry has already stated to me, you don't expect me to identify sources."
Lord Justice Leveson told him the only person able to lawfully listen to the message was Ms Mills or somebody authorised on her behalf.
Today, Robert Jay QC, counsel to the inquiry, asked the former glamour model: "Did you authorise Mr Morgan to access your voicemail?", she replied "never".
He asked: "Did you authorise Mr Morgan to listen to your voicemail?"
"Never ever," she answered.
Detectives from Operation Weeting contacted Ms Mills saying they had evidence her voicemails had been hacked, she added.
Also giving evidence today, the News of the World's former head of news said he was told to deliberately mislead the McCanns' spokesman about the newspaper's plans to publish Kate McCann's diary.
Ian Edmondson said former editor Colin Myler told him to have a "woolly" conversation with Clarence Mitchell about plans to publish Mrs McCann's diary so he did not know what the paper was planning.
Mrs McCann said she felt "violated" when the private journal appeared in the newspaper on September 14 2008.
Mr Myler has said he would never have published it if he had realised she was not aware of the paper's plans, and claimed Mr Edmondson told him he had cleared the story with Mr Mitchell.
But Mr Edmondson today said he was deliberately unclear in his conversation with Mr Mitchell, on the express instructions of Mr Myler.
"(Mr Myler) decided to ask me to make a call to Mr Mitchell, not make it clear what we had, telling him in general terms, basically make it woolly.
"He was frightened that if Clarence knew what we had, he might take action."
Mr Mitchell today said he felt vindicated by the evidence and Mr Myler had "some serious questions to answer".
Today's session concluded the first module of the inquiry, which looked into the culture, practices and ethics of the press in general.
The inquiry has sat for 40 days and has heard from 184 witnesses, and has accepted 42 written submissions.
The second module - looking at relations between the media and police - will begin on February 27.
The final part of the inquiry, 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.
PA
