If it got the go ahead, the scheme for a site on Cornwall Avenue, North Shore, would also include a training college for embalmers with residential accommodation for up to six students on the first floor.
But ward councillor Michele Scott has warned the use is "inappropriate" for the residential area.
A total of 33 objections to the planning application have been submitted to Blackpool Council, with concerns including increased traffic and parking problems.
Concerns have also been made about the "significant emotional" impact on nearby residents from bodies being regularly delivered to the proposed mortuary.
Coun Michele Scott, who represents Warbreck which includes the application site, says in her objection: "It has to be said also that the delivery and collection of bodies in such close proximity to residential properties, in an alleyway where children play and with the knowledge of that activity occurring, could have a significant emotional and psychological impact on residents, in particular the children."
She adds the use of formaldehyde in the embalming process could result in odours from waste at the rear of the property creating "a constant reminder of the purpose of the building."
She adds: "I do not consider this change of use to be appropriate in such a densely populated residential area, given its close proximity to residential properties."
Coun Scott also warns the use would attract additional vehicles which was also "a major issue when the foodbank was operating" from the same building.
She said this led to difficulty for residents to park their own vehicles, to pavements being blocked and obstructed driveways.
Applicant Andrew Floyd says there is a need to train embalmers due to the introduction of stricter licensing requirements for the funeral profession, including practitioners of embalming.
A statement accompanying the application adds: "This will require a professional qualification for embalmers, hence the training facility proposed on site."
The building was formerly occupied by Blackpool Food Bank, but later operated as the Blind, Deaf and Dumb Institute.
The application is awaiting consideration by council planners.