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Lynne Cox, 79, whose father flew with VC-winner Guy Gibson (pictured centre), says converting the landmark to the 1943 bouncing bomb raid will 'sully its history'.
Group Captain John 'Joe' Collier, from Hampshire, survived 63 raids and was awarded three top medals for his heroics. He also played a critical role in planning the legendary Dambuster raids in 1943.
A senior Home Office official advised the home secretary to stop work at RAF Scampton in Lincolnshire, warning of 'significant challenges to progress'.
An application was submitted on Tuesday to remove the grave, along with any remains, from Hangar Two at RAF Scampton and move it to RAF Marham in King's Lynn.
Far-right supporters led by activist Alex Yerbury (right) and anti-racism counter-protestors were kept apart in Lincoln as they rallied against Government plans over housing refugees at RAF Scampton.