"The Church does not normally encourage cremation. The family of the deceased must decide whether the body should be cremated, taking into account any laws governing burial or cremation. In some countries, the law requires cremation. 
 
Where possible, the body of a deceased member who has been endowed should be dressed in temple clothing when it is cremated. A funeral service may be held (see 18.6)."  
 
Source: Handbook 2: Administering the Church this handbook is found at lds.org 
 
So the Church's official position is that they do nor recommend or encourage cremation, but it is ultimately the families (and local laws) decision and the Church does not prohibit Cremation.