In a letter to Grenoble parishes in the southeastern French city, Bishop Guy de Kerimel said: "There is no need to go to a secular site to be welcomed by the Church and to pray for the departed."
According to The Tablet, the diocese began allowing Catholic prayer services outside of its church grounds two decades ago because increasing numbers of people didn't want to attend a service in a church.
There was also a shortage of priests to preside at religious ceremonies at some parishes.
"What was envisaged as an exception has become significant ... which could result in confusion between civil and Catholic funerals," the bishop wrote.
"May local residents know that they are welcome in the Catholic Church."
Parish volunteers had previously been authorised to accompany mourning families before burials and to hold services at sites other than a church before burials took place.
Bishop de Kerimel said he was confident his rule-change wouldn't lead to more families opting to have a secular funeral instead of a traditional Catholic ceremony.
Instead he said the rule "would let people who no longer know Jesus Christ and his Church to have the beautiful experience of a respectful reception, the discovery of the word of God, a meeting with the resurrected and the entry into the Church".
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