ROME, June 19 (Reuters) - Italian prosecutors are looking into the alleged hacking of seven phones, including that of the head of political gossip website Dagospia, sources said, as part of a surveillance scandal involving the technology of spyware company Paragon.

The probe follows reports on the alleged spying on two investigative journalists, which have triggered opposition protests and the termination of contracts between Italy and U.S.-owned Paragon.

Prime Minister Giorgia Meloni's administration has denied involvement in illicit activities.

Prosecutors in Rome and Naples are investigating the crime of unauthorized access into the phones, sources with knowledge of the matter said on Thursday, adding that Dagospia founder Roberto D'Agostino was among seven journalists and activists who were allegedly spied on.

D'Agostino, whose website Dagospia produces salacious gossip with political behind-the-scenes stories and is a daily must-read for many Italian reporters, was not immediately available for comment.

Dagospia, however, reported on the news involving its founder, republishing reports about the investigations from other media outlets under the headline: "Dagospia ends up being spied upon! The illegal wiretaps scandal gets bigger."

As part of their investigation, prosecutors are also looking into the alleged hacking of the phones of investigative reporters, Ciro Pellegrino and Francesco Cancellato, both from the Fanpage website, the sources said.

Italy's domestic and foreign intelligence agencies activated contracts with Paragon in 2023 and 2024, respectively, and used it on a limited number of people with permission from a prosecutor, a report by the parliamentary committee on security, COPASIR, said.

The foreign intelligence agencies used the spyware to search for fugitives, to counter illegal immigration, alleged terrorism, organised crime, fuel smuggling and for counter-espionage and internal security activities, COPASIR said.

The committee said it found no evidence that Italian intelligence services used Paragon spyware on Cancellato.

Separately, internet watchdog group Citizen Lab said it found evidence of spying on Pellegrino's phone.

Former Prime Minister Matteo Renzi, leader of a small opposition party, called for clarity on Thursday over the hacking case, adding that one does not spy on journalists in democracies.

(Reporting by Paolo Chiriatti, Giuseppe Fonte and Alvise ArmelliniEditing by Bernadette Baum)

((giuseppe.fonte@thomsonreuters.com; +390680307711;))