"I have yet to see any documentory evidence (other than the name) that links worm hill to the Lambton Worm story."
http://www.themodernantiquarian.com/post/17690
The song was written by C.M. Leumane in 1867 for a pantomime that was performed in Newcastle-upon-Tyne, at the Tyne Theatre.
Has anyone visited Worm Hill? And how about Worm's Rock (an island in the middle of the Wear, apparently) and Worm's Well?