The 'Mail on Sunday' described one of its reporter's decision to sneak into a private memorial for Harry Keen as a "terrible lapse of judgment".
"The reporter was sent without my knowledge; it was a decision which was wrong. Two journalists have been suspended and a full investigation is now being carried out," the newspaper editor Geordie Greig said.
"I would further like to apologise to members of the family and friends attending the service for this deplorable intrusion. I have already spoken personally to Ed Miliband and expressed my regret that such a terrible lapse of judgment should have taken place."
Miliband has formally objected to the insult and demanded an apology from the 'Daily Mail'.
However, the newspaper has now hit back with its own demand for an apology.
City editor Alex Brummer told the BBC the paper was owed an apology over claims that its Ralph Miliband articles were motivated by anti-semitism. "I don't think we need to apologise for anything. This was a piece which examined somebody's views very carefully," he said.
"They'll criticise me, they'll say my policies are wrong, that's absolutely fine. But when it comes to my dad, and saying my dad hated Britain, I'm afraid they're crossing a line," he stressed.
The issue has ignited a debate around press standards and freedom in the UK and comes days before a crucial meeting of British MPs next Wednesday on press regulation.
The plan is backed by the country's largest newspaper groups, including Mail publisher DMG Media, News UK, owner of the 'Sun' and the 'Times', Telegraph Media Group and Trinity Mirror.
Miliband supports an alternative plan, backed by the three main political parties and press intrusion victims campaign group Hacked Off, for a form of press regulation backed by royal charter.
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