The Cemeteries Authority Board has identified 220ha of land near Fadden and Macarthur which could be used for the 50ha cemetery. It includes the former site of the controversial Tuggeranong data centre and power station.

The board will carry out a feasibility study on the project, with community consultation to begin late this month.

Chief Minister Jon Stanhope first flagged the project in December, saying the former data centre site could be turned into a new cemetery, complete with a gas-fired crematorium.

Local residents, who fought to have the data centre moved from the site, were outraged at the plans.

Mr Stanhope said the area was a ''beautiful site'' that had been identified as the best spot for a south Canberra cemetery.

He said a cemetery would cost millions of dollars to build.

''I would imagine a crematorium with a chapel and the appropriate facilities is a piece of infrastructure that would probably cost, off the top of my head, in excess of $10million,'' he said.

Cemeteries board chairman Robert Smeaton, who will carry out the feasibility study and consultation, said there was room for more cemetery space in Canberra and a new crematorium was a sensible idea.

''Seventy per cent of residents of Canberra [are] now preferring cremation to ground burial or other means of disposal,'' he said.

The consultation will last eight weeks and include a community survey, information sessions and meetings with stakeholders.

Canberrans For Power Station Relocation spokesman Rodahn Gibbon said the group was open to a cemetery on the proposed site of the power station and data centre.

But the community's views should be genuinely heard and the consultation process followed through.

Other members of the group have previously attacked the cemetery plan as an act of revenge by Mr Stanhope.

Greens MLA Caroline Le Couteur said the Government should canvas community views on ''natural burials'' using biodegradable coffins and vertical burial to save space.

She said cremation released pollutants and used considerable energy.

''Human beings are not flammable, basically, so you use a lot of gas to burn bodies and there is also the potential for heavy metals, in our teeth and things like that [to be released]. It's not a very environmentally sound to do,'' Ms Le Couteur said.

Mr Stanhope said he was sympathetic to any proposal for a green cemetery and the Government would consider changes to the law to permit natural burials.