The Welsh government brought in new regulations to prevent fraudsters abusing the system in 2013.
Councils were told not to just rely on evidence from GPs and there are now concerns that people with genuine disabilities are being refused a badge.
BBC Wales has found that in some areas the number of rejections has more than tripled inside three years.
The Welsh government is looking into complaints from disabled drivers amid fears many elderly or deserving people could be missing out.
Blue badges are issued to people with mobility problems or disabilities and allow the driver to park on double yellow lines or in specialist bays closer to their destination.
Normandy veteran Neil McLeish, who landed on Sword beach with the Welsh Guards in 1944, had his application to renew his blue badge rejected by Neath Port Talbot council.
The 92-year-old angina sufferer from Ystalyfera had held the badge for 10 years but said he was told he had been unable to provide independent evidence to show he had significant difficulty walking.
He said: "Since they took the badge away I don't really go out much in the car because I'm afraid I won't get a parking place. I've just given up."
A Neath Port Talbot council spokesman said: "Welsh government recommends that assessment of eligibility for a blue badge under the discretionary criteria requires the applicant to provide supporting evidence of their mobility-related difficulties from an independent medical practitioner but this does not include their GP."
Of 10 councils which sent comparable data, eight have seen a rise in rejections in 2013-14 compared to 2010-11.
The Vale of Glamorgan council area has seen the largest increase - from 72 up to 237.
Neath MP Peter Hain said: "I'm horrified to learn that rejections are up to almost two thirds greater than they used to be, but it reflects my experience.
"I've never had so many complaints from people who are genuinely disabled."
A Welsh government spokesman said: "We introduced new regulations to ensure fairness and consistency in awarding of the badges, but several issues have been brought to our attention which we are now looking into."

A major crossing point is the Oresund strait bridge between Malmo in Sweden and the Danish capital Copenhagen, made famous by TV series The Bridge.
The checks have irritated commuters who travel daily between the two cities.
More than 163,000 asylum seekers arrived in Sweden in 2015 but that number fell to 29,000 last year.
The falling number of arrivals means the checks on buses, trains and ferries are no longer necessary, the government says.
But while ID checks at border points with Denmark are being scrapped, border controls elsewhere will continue to be tightened, it says.
Interior Minister Anders Ygeman also said more surveillance cameras would be used on the Oresund bridge, in addition to vehicle x-rays.
Meanwhile, the European Commission recommended that temporary border controls introduced in Germany, Austria, Denmark, Sweden and Norway during the migrant crisis be phased out in the next six months.
"The time has come to take the last concrete steps to gradually return to a normal functioning of the Schengen Area," EU Migration Commissioner Dimitris Avramopoulos told journalists, referring to the passport-free zone.
In November 2015, Sweden began allowing police to check people entering Sweden from other states in Schengen.
"The government's conclusion is that border controls are still needed and need to be strengthened," Mr Ygeman was quoted as saying by The Local news website, hours before the EU Commission's announcement.
The real story of 'The Bridge'
The measure mandating identity checks on passengers travelling between Denmark and Sweden by bus, train and ferry was last extended in February and expires on 4 May, with the government to let it lapse, Swedish media report.
An estimated 20,000 commuters daily cross the Oresund bridge.
Rejections for disabled parking badge applications have leapt up since tougher measures were introduced.
[NEXT_CONCEPT]
Sweden is ending identity checks on border crossings with Denmark that were instituted early last year as thousands of migrants arrived seeking asylum.