Undercover police officers working for Britain's largest force used the identities of dead children and issued fake passports in their names, reports the Guardian.
The Metropolitan Police authorised the practice for covert officers infiltrating protest groups without consulting or informing the children's parents, the newspaper said.
Over three decades, generations of officers reportedly went through national birth and death records in search of suitable matches.
Officers were then given aliases and issued with official documents such as driving licences and national insurance numbers.
Last night, Scotland Yard said the practice was not "currently" authorised.