James Percival, 66, said he had given mouth-to-mouth resuscitation to newborn Jonathan Percival after his daughter Ruth gave birth in the downstairs toilet of the vicarage in Freckleton in November 2014.
But Miss Percival, 30, said she had not seen him make any attempts to revive the baby.
The inquest into Jonathan’s death was halted last October when HM Coroner for Blackpool and Fylde Alan Wilson decided to refer the case to the Director of Public Prosecutions after a medic stated the newborn could have survived if resuscitation attempts had been made.
In March, the Crown Prosecution Service said there remained “insufficient evidence” to charge anyone.
Both Mr Percival and his daughter had previously been arrested and questioned on suspicion of child neglect before prosecutors advised police in April 2016 there was insufficient evidence and to take no further action.
The hearing at Blackpool Town Hall on Monday was told Miss Percival, who has some special educational needs, visited her GP surgery in August 2014 to arrange to terminate a pregnancy, but had been unable to have one because she was too far gone.
She agreed she had put her “head in the sand” about the pregnancy and had not told her parents because she was “scared” of their reaction.
The inquest heard Miss Percival had complained of back pain the evening before she gave birth and had arranged a doctor’s appointment for the afternoon of November 25.
Mr Percival, who at the time was the vicar of Holy Trinity CE Church in Freckleton, said after she returned home from work in the afternoon on November 25 she spent some time in the downstairs toilet.
He said at about 3.30pm he saw her come out of the bathroom carrying a towel covered with what he believed to be excrement and went outside with her to put the towel in a bin.
He said: “I was about to put the towel into a black bin liner when Jonathan’s leg came in sight.
“I said to Ruth ‘this is a baby’. I said ‘you can’t put a baby in the bin’.”
He said he placed the baby on the towel on the floor outside and attempted to resuscitate him.
He said: “I attempted that but I could feel when putting my hand on his chest that he was very, very cold, absolutely lifeless and his head was wet.”
He added: “The baby was quite clearly dead.”
Mr Percival said he took the baby inside the house and told Ruth to go upstairs and get ready for her doctor’s appointment while he cleaned the downstairs bathroom.
He then took her to the GP’s surgery, leaving the baby on the sofa.
Jonathan was not seen by a medical professional until about 5.35pm when Mr Percival let paramedics into the family home at Sunnyside Close.
The court heard medical evidence showed the baby was alive at the time he was born.
Miss Percival told the inquest her father had come into the bathroom after she had given birth and found her wrapping the baby in a towel.
She said: “He told me to go upstairs and get ready for the doctor’s appointment while he sorts the bathroom out.”
She told the court she thought she saw the baby trying to take a breath after he was born.
But, she said: “I kind of thought I did have a miscarriage because to me the baby was dead when he came out of me.”
Both Miss Percival and her father said Jonathan had the umbilical cord wrapped round his neck.
Mr Percival’s wife Susan told the hearing she did not know her daughter was pregnant and had been out at work when the baby was born.
When asked if the atmosphere at home might have been “so oppressive” that Miss Percival felt unable to tell them about the pregnancy she said: “Sometimes it was.”
The baby’s father, Brian O’Hanlon, did not attend the inquest.