We propose a cross-layer strategy for resource allocation between spatially correlated sources in the uplink of multi-cell FDMA networks. Our objective is to find the optimum power and channel allocation to the different sources, in order to minimize the maximum distortion achieved in decoding any source data in the network. This problem is NP-hard and finding the optimal solution is not computationally feasible. We propose a three-step algorithm to be performed separately in each cell, which finds cross-layer resource allocation in simple steps. This method separates the problem into inter-cell resource management, grouping of sources for joint decoding, and intra-cell channel assignment. For each of these steps we propose methods that satisfy different design constraints and analyze them by simulations. We show that, while using correlation in compression and joint decoding can achieve 25% distortion reduction over independent decoding, the improvement grows to 37% when correlation is also utilized in resource allocation. This significant distortion reduction motivates further work in correlation-aware resource allocation. Overall, our solution is able to achieve a 60% decrease in 5 percentile distortion compared to independent allocation methods.