The junkies were seen sleeping in graves, defecating in the plots and are also accused of intimidating the local schoolchildren and letting their dogs run wild.
Horror-struck passers-by spotted the disrespectful squatters sitting in the graves in Mill Road Cemetery, Cambridge, while injecting themselves and drinking, the 'Daily Mail' reported.
The site has been plagued by drunkenness, littering, drug taking and reports of the homeless people defecating on the plots over recent months.
Families of those buried at the site have demanded that the homeless be removed from the graveyard.
"It is not unusual to find drunken persons sleeping in this area and in some cases tombstone lids have been pushed off so they can sleep inside," Cambridgeshire Police PC Alan Tregilgas was quoted as saying.
"One resident said she was shocked when she saw a male sitting on a grave with his trousers down injecting himself in his thigh in full view of everyone."
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Police are considering taking action against nearby shops accused of fuelling the anti-social behaviour be selling alcohol to the louts.
Residents say they now avoid the graveyard, once regarded as a local beauty spot, and take the longer route around it because they feel it is unsafe.
Street drinkers, many of them homeless, have also been accused of intimidating pupils at a nearby St Matthew's Primary School.
PC Alan Tregilgas said there were also concerns over homeless people damaging the site and allowing vicious dogs to run free.
The shocking sightings come as latest figures show an increase of 23 per cent in those sleeping rough in the UK for 2010-11.
Gail Marchant-Paisley, a city councillor for the Petersfield area of Cambridge, said problems with anti-social behaviour in the cemetery were long-standing but seemed to be getting worse.
"There is great concern for those residents whose houses back on to the cemetery," she said.
Cambridgeshire police have spoken out about the problems in a bid to ban alcohol sales at a local shop, which they claim is a magnet for troublemakers.
They say drinkers visit the shop, then access the cemetery via an alleyway opposite.