Brian Simmonds was served with the legal notice on 9th December, informing him and his pet cat to leave by 23rd December.
According to the Diocese of Chichester, the situation arose despite many offers of accommodation, financial support and assistance from the local church, individuals and other agencies.
It said Simmonds refused all efforts to help and has been "moved on" by the authorities from other locations in Sussex on a number of occasions.
"For the sake of his health, safety, and wellbeing and in order for him to receive care and support, the parish have been left with no alternative but to resort to a legal process for him to leave the churchyard where he is currently living in a tent in freezing conditions," it added.
The church warned Simmons in September that legal action would be taken if he did not move.
The church's rector, Rev Kathryn Windslow, told the West County Sussex Times that Simmonds has made it uncomfortable for those who want to visit their relative's grave around Christmas time.
She said: "[He's] trespassing by pitching his tent in the churchyard and continuing to live in the tent.
"He cannot continue to disturb the graves around him. He has upset many people in the community by his actions. His tent cannot remain on consecrated ground."
The diocese said it is hoped that there will be no need for further action in the New Year.
