The Crown Cemeteries Advisory Committee is consulting on ways to cope with the crisis, including the possibility of legalising renewable tenure, where graves are rented rather than owned in perpetuity.
The manager of cemetery policy, Stephen Fenn, said it is also looking for appropriate new space in Sydney's west, south-west and north-west.
''We're in the process of contacting the councils and talking to them about issues like zoning,'' he said. ''Around 2040, if nothing is done, we're going to see critical shortages.''
Two of the current DAs being considered in Liverpool are for Muslim cemeteries, with about 10,000 plots between them, and the third is for a major new multi-denominational cemetery for 70, 000 plots.
About 60 per cent of Australians now choose to be cremated, but the practice is forbidden among Muslims and most Jews. The majority of Australian Catholics also still opt for burials, though attitudes are changing.
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