The Sydney Morning Herald reports the State Government has quietly entered the funeral business, giving Crown land cemeteries permission to set up funeral homes that will compete with private operators.

This week the Lands Minister, Tony Kelly, officially opened the first funeral home on state-owned land at the Eastern Suburbs Memorial Park in Maroubra. Public cemeteries at Frenchs Forest and Macquarie Park are expected to follow.

The service will provide packages from about $7000, allowing families to arrange everything from documentation and coffin to burial or cremation at one location. Previously the Crown land trusts which run state-owned cemeteries charged private operators for the use of burial and cremation facilities.

The chief executive of Eastern Suburbs Memorial Park, George Passas, said the new service would offer lower prices. ''We will not be charging the same huge margins that private operators charge on coffins and other costs,'' he said.