Morgan who was sacked late on Friday afternoon, after refusing a request by Trinity Mirror chief executive, Sly Bailey, to apologise over the abuse story, wants his two year rolling contract to be honoured in full, which would see the newspaper group pay him around £1m.
He is reported to have earned an annual salary of £350,000, but picked up a total package worth as much as £500,000.
On Saturday the paper published a humiliating and sombre apology to its readers with a black and white front page saying simply "Sorry ... We Were Hoaxed".
Inside the Daily Mirror said: "We apologise for publishing pictures which we now believe were not genuine. We also say sorry to the Queen's Lancashire Regiment and our Army in Iraq for publishing those pictures."
The regiment, which had on Friday called for a public apology from the paper, welcomed the news and the paper's decision to donate the profits it made from syndicating the pictures to charity, including the Army Benevolence Fund.
The two men codenamed Solider A and Solider B will be interviewed by the Royal Military Police about the faked photographs and could now face court martial and prison. The men are understood to have been paid £5,000 each.
At the weekend The Sunday Times reported that the military investigation team has already identified of one of the suspects from close examination of the hoax photographs. He is thought to be a member of the TA regiment, the Lancastrian and Cumbrian Volunteers, who served in Iraq with the Queen's Lancashire's. The Bedford lorry used in the fake photos was located at the unit’s Kimberley barracks in Preston.
In a statement Trinity Mirror said that it would co-operate fully with the investigation into the fake photographs.
In a statement the publisher said: "When we say we will fully co-operate with the MoD, we mean exactly that. While we are committed as journalists to protecting our sources, that does not extend to people who have acted fraudulently in pursuit of money."
However, the pressure to hand over the names of the TA soldiers could result in a bloody battle between management and journalists at Canary Wharf. It was being reported that four Daily Mirror journalists know the names of Solider A and B, but two might well resign as a matter of journalistic principle rather than name their sources.
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