The newly discovered ancient settlement, thought to date back to 4700 BC, is near the Bulgarian town of Provadia, about 40 km from the country's Black Sea coast.
Archaeology professor Vassil Nikolov led the dig which focused on the town itself and its necropolis, where the strange and complex burial rituals were discovered, the 'Daily Mail' reported.
"Now we can say that the Provadia salt pans location is the oldest town in Europe, [dating from] roughly 4700 to 4200BC," he said.
There is as yet no clue as to why some corpses have been sliced in half and buried from the pelvis up, but researchers found evidence to show some residents of the salt-producing area were wealthy people.
The town's 300 to 350 residents lived in two-storey homes and earned their living mining the surrounding area for salt, which was as important to the ancient world as oil is today, Nikolov told the Sofia Globe.
"The salt water was evaporated by different techniques in ceramic bowls. Salt produced was used as money because salt was essential for both humans and animals," Nikolov told CNN.
The nearby town of Provadia remains an important salt centre to this day, with much foreign investment in the area devoted to extracting the stuff.
However, in ancient times Provadia-Solnitsata would have needed little in the way of outside money since it was the only place in the Balkans where salt was produced at that time and was therefore the 'mint' of the region.
The town was surrounded by stone walls three metres high, and a phenomenal two metres thick, which researchers believe are the earliest and most massive fortifications of Europe's pre-history.
Other findings suggested that even 7,000 years ago the residents of the town had already developed a class system.
Archaeologist Margarita Lyuncheva, a member of Nikolov's team, told CNN that finds of spiral copper needles for hairdressing in some graves showed "there are two grades of people, [one] probably with higher social status".
"We think that women had a sort of bun-shaped hairstyle." she added.
British, Japanese and German scientists have confirmed the Bulgarian team's findings, which were made during a two-month dig over the summer.
