The former world champion, nicknamed The Hitman for his knock-out punching, is alleged to have used "industrial quantities" of the drug by the News of the World.
Hatton, 31, who has still to officially retire from the sport following a succession of multi-million pound title fights, is captured in video footage appearing to use a credit card to cut lines of cocaine before snorting them through a rolled-up bank note.
His spokesman Max Clifford said: "He feels he's let everybody that matters down badly, his friends, his family, his fans and of course most of all himself, that he is, in his own words, he's been in a bad place for some time, probably before even his last fight and obviously he's really upset about what has happened but he totally takes responsibility, takes the blame, 'It's all down to me'.
"He just wants to let everybody know how he feels, he's got to sort himself out.
"I think it is fair to say, friends and family have been trying to warn him in recent times, for the last few months and now they are all hoping this situation will bring him to his senses.
"I think obviously everybody is hoping some good will come out of this. He feels devastated and we all hope this will be the wake-up call."
The newspaper said the video footage was captured over several hours at a Manchester hotel two weeks ago while Hatton was on a night out with friend Emma Bowe, 29, the Irish national senior women's boxing champion.
She told the paper Hatton also sank 11 pints of Guinness, vodka, wine and sambuca during the night out.
"I'm only talking about this because Ricky is a danger to himself. If he carries on like this he'll kill himself," she is quoted as saying.
"I'm really, really worried for him, especially if he tries to make a comeback in the ring as he's hinted – he could have a heart attack."
Hatton, who has a nine-year-old son, still lives close to his hometown of Hyde, outside Manchester, with his fiance Jennifer Dooley.
He was awarded an MBE in 1997, is now heavily involved in promoting other boxers, having not fought himself for more than a year.