The phone, with the images of the man known as David Amor, was found in a ditch in Aylesbury, Buckinghamshire, by two young children over the weekend.

It is one of three disturbing images on the phone that show the decapitated body of a man believed to have been hit by a train.

They were believed to have been taken at the mortuary where Amor was working to preserve the body of the dead man until his funeral could take place.

The images are now the subject of a police investigation.

Chief Inspector Olly Wright, of Aylesbury Vale police, said: ‘The incident is being treated seriously and while we carry out our initial investigation we feel it would be inappropriate to speculate as to the circumstances in which this photo was taken.”

The phone was found by a brother and sister, aged 12 and 10, who gave it to their father.

In an attempt to identify the phone’s owner, he removed the SIM card and put it in his own computer.

He said: “It’s like when you find a wallet, you look inside to see if there’s anything to say who it belongs to.

“However, after finding that, I don’t want to get in touch with this guy. It’s a total lack of respect for the dead.

“That was probably someone’s father, someone’s son and someone’s brother, it’s unbelievable to think they could do that to someone.”

The father-of-two, who did not want to be named, described how his children screamed and ran out of the room when the images showed up.

Also on the phone were lists of Amor’s appointments and an electronic business card for his embalming business.

He advertises his services at £50 pounds for ‘straight cases’, and £60 pounds for ‘PM’ cases.

The process of embalming preserves a body so it can be displayed at a funeral.

Amor is understood to live with a cross-dresser, David Hill, in Aylesbury.

When questioned by a Daily Mail journalist at his home, Hill refused to comment about the pictures.

Apparently wearing a blond wig and accompanied by another person who also looked like a man dressed as a woman, Hill shouted: “We don’t want to make a comment. No comment. Go away or we are calling the police.”

Amor’s neighbours described his actions with the severed head as “vile.”

“Its disgusting,” said one man. “They live here now and I hope it will be ‘lived here’ soon.”

A spokesman for the British Institute of Embalmers, said Amor appeared to breach a strict code of ethics to treat every body with respect.

“If it was one of our members, they’d be on a disciplinary, and thrown out of the institute” said the spokesman.