Equation of AB is x – y = 0
∴ equation of circle is
(x – 1) (x – 2) + (y – 1) (y – 2) + λ(x – y) = 0
or x2 + y2 + (λ – 3)x – (λ + 3)y + 4 = 0
or (λ – 3)2 + (λ + 3)2 – 16 = 4.
or 2λ2 = 2
or λ = ± 1
∴ equation of circle is
x2 + y2 – 2x – 4y + 4 = 0 & x2 + y2 – 4x – 2y + 4 = 0