Britain's largest police force stole the identities of an estimated 80 dead children and issued fake passports in their names for use by undercover officers.
The London Metropolitan police secretly authorised the practice for officers infiltrating protest groups without consulting or informing the children's parents.
An investigation by The Guardian established how over three decades police officers trawled through birth and death records in search of suitable matches.
Undercover officers created aliases based on the details of the dead children and were issued with driving licences and national insurance numbers. Some of the police officers spent up to 10 years pretending to be people who had died.
The Met said the practice was not "currently" authorised, but announced an investigation into "past arrangements for undercover identities used by SDS [Special Demonstration Squad] officers".
Keith Vaz, the chairman of parliament's home affairs select committee, said he was shocked at the "gruesome" practice. "It will only cause enormous distress to families who will discover what has happened concerning the identities of their dead children," he said.
The technique of using dead children as aliases has remained classified intelligence for decades, although it was fictionalised in Frederick Forsyth's 1971 novel The Day of the Jackal. As a result, police have internally nicknamed the process of searching for suitable identities as the "jackal run".
Two undercover officers have provided a detailed account of how they and others used the identities of dead children. One, who adopted the fake persona of Pete Black while undercover in anti-racist groups, said he felt he was "stomping on the grave" of the four-year-old boy whose identity he used.
"A part of me was thinking about how I would feel if someone was taking the names and details of my dead son for something like this," he said.
The other officer, who adopted the identity of a child who died in a car crash, said he was conscious the parents would "still be grief-stricken". He argued his actions could be justified because they were for the "greater good". Both officers worked for the secretive SDS, which was disbanded in 2008.
A third undercover police officer in the SDS who adopted the identity of a dead child can be named as John Dines, a sergeant. He adopted the identity of an eight-year-old boy named John Barker, who died in 1968 from leukaemia.
The Met said in a statement: "A formal complaint has been received which is being investigated by the DPS [Directorate for Professional Standards] and we appreciate the concerns that have been raised … We can confirm that the practice referred to in the complaint is not something that would currently be authorised in the [Met police]."
One document seen by The Guardian indicates that around 80 police officers used such identities between 1968 and 1994. The total number could be higher.
To fully immerse himself in the adopted identity, Black visited the child's hometown to familiarise himself with the surroundings. Black said SDS officers visited the house they were supposed to have been born in so they would have a memory of the building.