Portuguese police believed Madeleine McCann died in her family's holiday flat and that her parents faked her abduction, a court has heard.

Her parents, Kate and Gerry McCann, faced the former detective Gonçalo Amaral across a courtroom as he tried to overturn a ban on his book, which claims their daughter is dead.

One senior detective told the hearing, in Lisbon, that police made the McCanns "arguidos", or suspects, in the case, after concluding that Madeleine had died accidentally and that her parents covered up her death by inventing a kidnapping.

Chief Inspector Tavares de Almeida said he believed the British child had died in her family's apartment in the Algarve resort of Praia da Luz on the day she went missing. He told the court the main evidence for this was the findings of British police sniffer dogs sent to Portugal to examine the flat. The McCanns' lawyer, Isabel Duarte, challenged this claim, arguing that the results from sniffer dogs did not constitute proof and were not allowed as evidence in the case.

The McCanns, both 41, from Rothley, Leicestershire, flew to Portugal ahead of the trial at Lisbon's main civil court, which is listed for three days.

Amaral is calling a series of senior Portuguese officials involved in the investigation into Madeleine's disappearance as witnesses to support his allegations. His lawyers argue that the material in his book is contained in the official Portuguese police files for the case, many of which were made public in August 2008.

José Cunha de Magalhaes e Meneses, the local public prosecutor in the Madeleine investigation, gave evidence via video link. Asked whether he believed the little girl was dead, he said it was "50-50".

Amaral's lawyers were also seeking evidence from a British police officer, Detective Sergeant Jose De Freitas, of the Met, who was seconded to Leicestershire police to help with the British end of the investigation. The McCanns are not expected to give evidence.

Madeleine was nearly four when she went missing from her family's rented apartment on 3 May 2007 while her parents dined nearby. Her mother and father were made suspects four months later, but this status was lifted when the investigation was shelved in July 2008. The couple have always strenuously denied involvement in the disappearance of their daughter, whom they believe was abducted.

Amaral initially led the Madeleine inquiry for Portugal's CID, the policia judiciaria (PJ). But he was taken off the case in October 2007 after criticising the British police. In his book Maddie: The Truth Of The Lie, published in July 2008, Amaral claimed Madeleine died in the flat on the night she vanished and questioned the McCanns' account. A Portuguese judge granted the McCanns an injunction in September last year banning further sale or publication of the book. The former police officer was prohibited from repeating his claims about Madeleine or her parents.

The McCanns are also seeking €1.2m (£1.1m) in compensation for defamation in separate legal proceedings against Amaral in Portugal. They have said any damages would go towards paying for private investigators to look for Madeleine.