X-Ray diffraction analysis shows the co-solubility of La³⁺ and Yb³⁺ into BaTiO₃ according to the formulae La_xBa_1−xTi_1−xYb_xO₃ (LBTYb) to be as high as x = 0.45. Raman spectroscopy analysis suggests the occurrence of continuous ion clustering with increasing x, which culminates with nanometric phase separation at x ≥ 0.35, as revealed by dark-field transmission electron microscopy. The room temperature relative permittivity, ε_RT, of LBTYb ceramics decreases from ∼1600 for x = 0 to ∼62 for x = 0.45. The Curie temperature, T_c, of LBTYb ceramics decreases at a average rate of ∼ 23 K/at% La/Yb for x ≤ 0.20. Relaxor-type behaviour is observed for 0.10 ≤ x ≤ 0.35. A nearly linear dielectric response is observed for 0.40 ≤ x ≤ 0.45, but below 25 K, ε_r decreases sharply, whereas the magnetic susceptibility increases. The microwave dielectric properties of x = 0.40 ceramics are ε_RT ∼ 65 and tan δ ∼ 0.01 at ∼5 GHz. The high dielectric loss may be primarily associated with anharmonic phonon interactions resulting from the phase separation.