By Kate Holton and Keith Weir
LONDON (Reuters) - Stalking children, rummaging through bins, bullying and deceit -- the tricks of the tabloid newspaper trade are being laid bare at a public inquiry that is giving Britons a sobering insight into how their appetite for gossip and scandal is satisfied.
Analysts and members of the industry say the revelations are highly damaging and will likely further harm newspaper sales, especially for the popular tabloid titles, and will inevitably lead to tighter regulation of an industry that polices itself.
"I think this has been the most damaging week to the British tabloid newspapers that I can remember," Max Clifford, the country's most high profile publicist, told Reuters.
"People are disgusted, offended and I think a lot of people will say that they just won't buy tabloid newspapers."
Prime Minister David Cameron ordered the inquiry into media practices in July amid a public outcry over widespread phone hacking at the now closed News of the World tabloid, part of Rupert Murdoch's News Corp media empire.
Appearances this week by actor Hugh Grant and Harry Potter author JK Rowling have been broadcast live on rolling news channels and exposed how newspapers scrapping for survival in a declining market ruthlessly target public figures.
"I think an awful lot of people who have bought the News of the World, who still buy the Mail and the Sun and the Mirror will be absolutely horrified by what they've seen -- that this is the way they get the stories that they've been reading," said Steven Barnett, professor of communications at Westminster University in London.
"The Germans love gossip, the Italians can't get enough of it. The difference is they don't condone a culture within some parts of the press which simply exploits other people's lives for their own profit."
Grant, star of "Four Weddings and a Funeral," said a section of the press had become toxic over the last 20 or 30 years.
"Its main tactic being bullying, intimidation and blackmail. And I think that it's time that this country found the courage to stand up to this bully now," he said.
Having thrown down the gauntlet, Grant found himself effectively accused of lying by the mid-market Mail newspaper group when he said he believed its Sunday edition newspaper had hacked his phone.
The inquiry, headed by senior judge Brian Leveson, extends well beyond phone hacking and has a remit of examining the culture, practices and ethics of the media.
While celebrities have commanded most of the attention, the most moving testimony has come from people unwittingly thrust into the public eye as victims of crime.
Sally Dowler, whose teenage daughter Milly was murdered in 2002, described how she was duped into believing the missing schoolgirl was still alive when a call went through to a previously full voicemail box.
In fact, her phone had been accessed and messages deleted. News Corp last month agreed to pay the Dowlers 2 million pounds ($3 million) over phone hacking claims.
"The public are becoming aware of ordinary members of the public being crucified and that's what results in the loss of circulation," said publicist Clifford, who last year won an out of court settlement from the News of the World over hacking.
"It was Milly Dowler that shut the News of the World."
Data suggests many Britons have given up on Sunday newspapers after News Corp closed its scandal-hit title in July.
Daily Mail reader Bridget Sach said the press should focus on bigger issues like rising unemployment.
"We've all got lives to live. We all make mistakes," Sach, 56, told Reuters in central London. "I'd rather hear news."
Industry analysts said the newspapers would have to launch their own publicity campaigns to defend their reputations and remind readers of the good they can do, in exposing hypocrisy and corruption.
However, changing the mindset in the media -- old and new - is likely to prove hard.
Rowling was driven away from the court on Thursday with photographers chasing her down the street looking for a final image. And on the Twitter micro-blogging website a new star was born, when a telegenic young woman lawyer featured prominently in TV shots at the Leveson inquiry.
"#womanontheleft" was how Carine Patry Hoskins was described on Twitter before the mainstream media followed up and extended her 15 minutes of fame.
(Additional reporting by Li-mei Hoang; Editing by Rosalind Russell)