From David Beaulieu,
Your Guide to Landscaping.
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Definition: Living mulches can be cover crop plants that are planted around and between the primary plants in a garden to control weeds, prevent erosion, facilitate water penetration and improve the soil. "Living mulch" can also refer to groundcovers planted for weed control. Living mulches thus serve a role similar to that of more conventional mulches. Living mulch plants are sometimes used in companion planting.