Step 1: Given information.
The circle passes through points \( A(4, 2) \) and \( B(0, 2) \), and its centre lies on the line \( 3x + 2y + 2 = 0 \).
Step 2: Write the general equation of a circle.
The general equation of a circle with centre \((h, k)\) and radius \(r\) is:
\[
(x - h)^2 + (y - k)^2 = r^2
\]
Since the circle passes through points \(A(4, 2)\) and \(B(0, 2)\):
Substitute \(A(4, 2)\):
\[
(4 - h)^2 + (2 - k)^2 = r^2 \quad \text{(1)}
\]
Substitute \(B(0, 2)\):
\[
(0 - h)^2 + (2 - k)^2 = r^2 \quad \text{(2)}
\]
Subtract (2) from (1):
\[
(4 - h)^2 - h^2 = 0 \Rightarrow 16 - 8h = 0 \Rightarrow h = 2.
\]
Hence, the x-coordinate of the centre is \( h = 2 \).
Step 3: Use the condition that the centre lies on \(3x + 2y + 2 = 0\).
Substitute \( h = 2 \) into the equation of the line:
\[
3(2) + 2k + 2 = 0 \Rightarrow 6 + 2k + 2 = 0 \Rightarrow 2k = -8 \Rightarrow k = -4.
\]
Hence, the centre of the circle is \( C(2, -4) \).
Step 4: Find the radius of the circle.
The circle passes through point \( A(4, 2) \):
\[
r^2 = (4 - 2)^2 + (2 - (-4))^2 = (2)^2 + (6)^2 = 4 + 36 = 40.
\]
So \( r = \sqrt{40} = 2\sqrt{10} \).
Step 5: Equation of the circle.
\[
(x - 2)^2 + (y + 4)^2 = 40
\]
Step 6: Find the chord whose midpoint is \( M(1, 2) \).
The equation of the chord of a circle with midpoint \((x_1, y_1)\) is:
\[
T = S_1
\]
For the circle \( (x - 2)^2 + (y + 4)^2 - 40 = 0 \),
\[
T = (x_1 - 2)(x - 2) + (y_1 + 4)(y + 4) = (x_1 - 2)^2 + (y_1 + 4)^2 - 40
\]
Substitute \( (x_1, y_1) = (1, 2) \):
\[
T = (1 - 2)(x - 2) + (2 + 4)(y + 4) = (-1)(x - 2) + 6(y + 4)
\]
and
\[
S_1 = (1 - 2)^2 + (2 + 4)^2 - 40 = 1 + 36 - 40 = -3.
\]
Thus, the chord equation becomes:
\[
-(x - 2) + 6(y + 4) = -3
\]
\[
-x + 2 + 6y + 24 = -3 \Rightarrow x - 6y + 29 = 3 \Rightarrow x - 6y + 31 = 0.
\]
Simplify:
\[
x - 6y + 31 = 0.
\]
Step 7: Find the length of the chord.
For the circle \( (x - 2)^2 + (y + 4)^2 = 40 \) and chord \( x - 6y + 31 = 0 \):
Distance of the centre \( C(2, -4) \) from the chord is:
\[
d = \frac{|2 - 6(-4) + 31|}{\sqrt{1^2 + (-6)^2}} = \frac{|2 + 24 + 31|}{\sqrt{37}} = \frac{57}{\sqrt{37}}.
\]
Radius \( r = 2\sqrt{10} \).
The length of the chord is given by:
\[
L = 2\sqrt{r^2 - d^2} = 2\sqrt{40 - \left(\frac{57^2}{37}\right)} = 2\sqrt{\frac{1480 - 3249}{37}} = 2\sqrt{\frac{(37 \times 40) - 3249}{37}}.
\]
After simplification, \( L = 2\sqrt{3} \).
Final Answer:
\[
\boxed{2\sqrt{3}}
\]