Mr Merritt, 25, and Saskia Jones, 23, were fatally stabbed by Usman Khan during a prisoner rehabilitation event near London Bridge on November 29 last year.
He was tackled by members of the public armed with a narwhal tusk, a decorative pike and a fire extinguisher before he was shot dead by police on London Bridge.
Mr Merritt’s parents, Anne and David, his brother Joe and his girlfriend Leanne O’Brien are now taking legal action against the Ministry of Justice (MoJ) and the Home Office at the High Court.
Their solicitor said on Thursday that the family had been left with “no alternative” but to issue proceedings on Wednesday, shortly before the one-year time limit for claims brought under the Human Rights Act.
Kate Maynard, a partner at Hickman and Rose, told the PA news agency that “all the relevant public bodies who are legally represented at the inquest” had reached a “standstill agreement” with the family – except for the MoJ and the Home Office, which she said “unfathomably” did not agree.