Not true.. Initially all the dead were buried locally, however following modern repatriation capabilities, it was offered, and taken up by the next of kin in most cases. Not all bodies were repatriated and some 13 remain buried at Blue Beach Cemetary, Port San Carlos including Lt Col H Jones which I visited several times. My friend Capt Dave Wood, was also buried there, but was subsequently re-interred. The Argentine dead were interred on the island although I understand an offer was made to the Argentine Government to repatriate the bodies, but was refused.
UK practice changed after the Falklands, mainly due to the ability to repatriate bodies quickly by air, something that was not practical in earlier conflicts. All fatalities from both the Iraq and Afghanistan conflicts have been repatriated. This can only ever be a local policy as in the situation where active conflict in train, the need to hygienically deal with the dead will always depend on circumstances!