The announcement of the legal challenge came minutes after the coroner presiding over the Ashley Smith inquest rejected a request for a sealing order.
"My instructions are to seek a judicial review of your decision," Correctional Service of Canada lawyer Joel Robichaud told Dr. John Carlisle.
Robichaud's call by to adjourn the inquest pending the legal challenge dismayed the room full of lawyers, who were set to argue motions about what the inquest should look at.
Julian Falconer, who speaks for Smith's family, slammed the adjournment motion as "colossally" without merit.
"A losing party will always have an interest in stopping things," Falconer said.
Falconer accused the government of holding the inquest "hostage" at taxpayers' expense.
Other lawyers urged that the hearings proceed, with one saying the process has already been "agonizingly slow" and another calling the adjournment request unconstitutional.
After recessing for more than an hour, Carlisle ruled the hearing should go ahead Wednesday with arguments over the scope of the inquest.
Much information about Smith's case is already public, he noted, and so continuing would cause no irreparable harm to Corrections but delays could hold up measures that could save the lives of other inmates.
Smith, 19, of Moncton, N.B., choked to death in her cell in Kitchener, Ont., five years ago after repeated bouts of self-harm.
Attempts at getting an inquest going have foundered repeatedly on legal wrangling. The challenge by Correctional Service Canada raised the prospect of further delays.
Earlier, Robichaud argued the videotapes had the potential to "inflame the public" and subvert the process even before a coroner's jury takes its seat.
Lawyers for Smith's family and media outlets called that position absurd.
Falconer pointed out that video showing Smith dying has previously been screened publicly after a battle that went to the Ontario Court of Appeal.
"There can be no more striking piece of evidence than the death video," Falconer said.
Corrections was the only one of the nine parties in the coroner's courtroom to favour a publication ban.
Media lawyer Paul Schabas called the ban request "utterly untenable," and in conflict with the open-court principle.
Speculation about possible harm was not enough to order the secrecy, he said in denying the sealing order.
The video issue came to the fore because a handful of doctors _ backed by Correctional Service _ are challenging the scope of the inquest.
They argue Carlisle's authority ends at the Ontario border.
Smith's family _ backed by the province's child advocate, prisoner advocates and prison guards _ argues the inquest must examine her treatment in institutions outside Ontario.
Among other things Smith spent her final year in solitary confinement, shunted 17 times among nine different prisons in five provinces with little treatment for her mental illness.
The family plans to use the videos and other materials to argue the inquest should be broad _ as Carlisle wants.
Among other things, the videos show Smith being physically restrained for hours at a time, at one point, strapped to a gurney in a wet security gown.
They also show staff at the Joliette Institution in Montreal giving her intravenous drugs without her consent. On one occasion, guards in riot gear surround the handcuffed Smith as she is injected. At another point, they use duct tape to restrain her.
Before the scope challenge, Carlisle had been set to summons three out-of-province psychiatrists who treated Smith _ Jeffrey Penn, of Truro, N.S., Renee Fugere, of Montreal, and Olajide Adelugba, of Saskatoon.
However, two psychiatrists and a general practitioner in Ontario _ Loys Ligate, Carolyn Rogers and Sam Swaminath _ backed by Correctional Service Canada balked at the summonses.
Don Head, commissioner of Correctional Service Canada, has refused to talk about the inquest or what Falconer considers a "state cover-up" over Smith's treatment.
On Tuesday, Canada's correctional investigator reported cases of serious self-injury by federal inmates has nearly tripled in the last five years _ almost one-third of them in segregation units.
Women offenders accounted for one-third of the incidents.
The Smith inquest, slated to start hearing evidence in January, is the second one. The first was aborted last year when the presiding coroner retired after months of acrimonious legal battles.