Magnetic tunnel junctions (MTJs) based on fully spin polarized ferromagnetic manganites have generated a lot of interest due to their enhanced field sensitivity at low temperatures. However, the tunneling magnetoresistance (TMR) drops rapidly with increasing temperature due to the reduction of spin polarization at the manganite-insulator interface. We have devised a method for creating intrinsic tunnel barriers by tuning the phase competition in manganites using substrate induced strain. Ultrathin films (7.5nm) of the mixed phase manganite (La0.5Pr0.5)0.67Ca0.33MnO3 (LPCMO) grown on the substrate (110) NdGaO3 using pulsed laser deposition show positive magnetoresistance (MR) of about 30% at magnetic fields less than 1T. Unlike the fabricated MTJ devices, this MR effect has its maximum value close to the insulator to metal transition temperature and reduces with decreasing temperature. To find out the mechanism leading to this positive MR, the effect of three orientations of the magnetic field on the LPCMO thin films were studied: (1) perpendicular to the plane of the film, (2) parallel to the plane of the film and applied current, and (3) parallel to the plane of the film but perpendicular to the applied current. The effect of field orientation suggests that a possible mechanism for the positive MR is tunneling magnetoresistance due to the spin conserving tunneling process across the insulating regions separating the ferromagnetic metallic regions. The voltage dependence of the MR also supports this mechanism. Our results suggest a novel method for obtaining enhanced TMR in manganite based MTJs by creating strain induced intrinsic tunnel barriers.