Didcot Cemetery is closing its gates to non-residents because it is running out of space.
Until now, the cemetery in Glebe Road has allowed relatives of people living in the town to be buried in its grounds but, in light of planned housing developments, the town council has decided to tighten the rules.
Two-thirds of residents on the proposed 4000-home Didcot West development, currently the subject of a Government planning inspector's inquiry, will now be barred from being buried in the cemetery.
Town council leader Margaret Davies said the decision was taken to preserve the site but she admitted it could create a split community.
"It is regrettable as I would like to see a unified town -- not them and us. Didcot needs a real community," she said.
"Closing the cemetery to residents on the Didcot West estate will not help them settle in or feel part of the town."
The proposed estate, although geographically attached to the town, will be split between the parishes of Didcot, East and West Hagbourne, and Harwell. It will also be split between two district councils -- South Oxfordshire and the Vale of White Horse.
Mrs Davies is calling for boundary changes to solve practical and administrative problems.
"It needs to be dealt with logically and rationally to provide a community at Didcot," she said.
The planning inspector's report on the development is due later this month.
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