"Wu called us after her grandmother died, I gritted my teeth and told her: 'everything's fine, there aren't any problems'," Wu's father Wu Jueming told the paper.
Wu's parents found such lies were "essential" to ensure their daughter could keep focused on her training, the Shanghai Morning Post said.
"We never talk about family matters with our daughter," the father said.
Thousands of Chinese web users took to Sina Weibo - a Chinese microblog similar to Twitter - to condemn what they called the parents' "white lies" as an example of the harshness of China's government-funded sports system.
"Apart from making people crazy, our Olympic strategy also makes people lose their humanity," one online commentator said. "Our national sports system is disgusting," said another.
China's Soviet-style sports schools, which select and groom potential athletes from a young age, often with hours of tough training every day, have produced many world champions and the country is leading the gold medals table at the London Games.
But it has also been criticised for pushing young athletes too hard.
The Shanghai Morning Post said Wu's parents rarely saw their daughter, keeping track of her activities by following her microblog account.
They travelled to London to support their daughter, but did not meet her in person before her diving final, it said.
"We've only sent our daughter one text message since we arrived in London, to tell here we are safe, so she wouldn't worry," Wu's father said.
"She doesn't call us often because she's busy with training," the father said.
"We've known for years that our daughter doesn't belong to us any more."
- Herald Online and AFP
