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The woman, identified by police as Leah Andrews, was under police guard in a hospital in the Cretan capital Heraklion, where she is being treated for blood loss after giving birth at a hotel in the nearby coastal resort of Malia.
She has been informed that she will be charged with killing her newborn child and prosecutors are likely to officially present the charges on Tuesday provided her medical condition improves sufficiently, police and British diplomats said.
"A young British girl, 20-years-old, has been arrested in Malia on suspicion of child murder," police spokesman Panagiotis Stathis said in Athens.
The woman had travelled to the popular package-tourist destination of Malia on Crete's north coast with her sister and a female friend from Britain. The three women were sharing a room at a hotel, local police said.
Police were notified after the woman's two companions rushed her to hospital in Heraklion, some 30 km (19 miles) west of Malia, to receive treatment after she gave birth to the baby at the hotel.
Police found the dead child in the hotel room with sheets around its neck and covering its face, Stathis said. A coroner's report concluded the child had died of asphyxiation.
"When the baby was born it was alive and breathing, after that someone killed it violently," the coroner Manolis Mihalodimitrakis told reporters.
A Foreign Office spokesperson in London said the woman was receiving consular assistance and had been informed that she would be charged.
Britons make up about a fifth of the 15 million tourists that visit Greece every year, attracted by its hot summer weather and sandy coastline.
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