A tiny Colorado town has been plunged into a national debate after stopping a church from using its amphitheater for Sunday prayers.

Town officials in Dillon blocked all non-town sponsored groups from using the space - including Dillon Community Church which had held events there for 42 years - after being inundated with rental requests. 

The decision has catapulted the 1,000-person town to the center of a debate over worship in public facilities.

Pressure groups on both sides are threatening lawsuits, with some demanding the Church be given special dispensation to gather, while others slam the preferential access as 'Christian privilege'. 

Town manager Nathan Johnson told The Denver Post: 'There needs to be a separation of church and state. We cannot favor one denomination over another.'

The amphitheater was built in 1993 and renovated to become a top of the range venue in 2018, with views over the water to the mountains beyond. 

Dillon Community Church have hosted their worship events there for decades, paying an annual $1,100 rental fee and drawing in over 300 people a week.

Then, earlier this year, other groups including a synagogue and Native American tribes asked the council to use the space. 

Johnson told The Post: 'Everybody is attracted to the lake, the natural beauty of the lake.' 

The council can't accept everyone, he said, and they had to place the other groups on 'hold': 'Now with the popularity of the venue we have more and more people reaching out. Everybody wants to be down there.'