The development of high-performance bio-inspired composites is one of the contemporary topics of research interest. Experiments on composites made of constituents with contrasting material properties and thus possessing a distinct material interface have shown very promising results in terms of having high strength and high toughness. To the best of the knowledge of the authors, although several analytical studies on the functionally graded in-homogeneous plates with material properties varying in exponential or power series manner are available in the literature, there is no analytical method to find a closed-form solution for composites with a distinct material interface. Because of no availability of analytical methods, finite element solutions are extensively used for the analysis of these problems. However, validation of the finite element solution for composites with material interface against benchmark problems will increase the confidence. In this work, we propose a diffused material interface-based novel method for finding analytical solutions of elastic deformation in composites with in-plane inhomogeneity that can be used as benchmark problems for the validation of the finite element solutions. In the proposed analytical method, we have diffused the material interface by using a Gaussian kernel function and derived expressions for the material properties that are smooth, i.e., functions and their derivatives are continuous, in the entire domain. We have then used the Galerkin method to solve the governing partial differential equations for the derived smooth material properties. We have demonstrated the efficacy of the proposed analytical approach through illustrative examples of the composite bar, beam, and plates with in-plane inhomogeneities.