Culture Secretary Maria Miller has said the arts world must make the case for public funding by focusing on its economic, not artistic, value.
She told arts executives in a speech that they must "hammer home the value of culture to our economy".
Ms Miller said: "When times are tough and money is tight, our focus must be on culture's economic impact."
But National Theatre boss Sir Nicholas Hytner said there was "a contradiction at the heart of her thinking".
Arts organisations are facing big challenges as a result of austerity measures from central and local governments.
In her first keynote speech since becoming culture secretary last September, delivered at the British Museum in London, Ms Miller said: "I want to make it clear that I am fighting your corner as hard as I can within government."
She told the audience: "The government wants participants - not bystanders.
"I need you all to accept this fundamental premise, and work with me to develop the argument."
The government, she said, is "committed to a mixed economy model" that combines public and private funding for the arts.
But arts organisations were told they should "demonstrate the healthy dividends that our investment continues to pay".
Ms Miller said British culture was "perhaps the most powerful and compelling product we have available to us", especially after the success of last year's Olympics and Paralympics.
"Either way, British culture and creativity are now more in demand than ever before... The world clearly thinks this is a commodity worth buying into," she said.
After the speech, Sir Nicholas Hytner said: "She seems to be acknowledging that the arts are an engine for growth, but growth is what we are desperately in need of.
"Cutting what produces growth seems to me to be not good policy in arts."
Shadow Culture Secretary Harriet Harman said she supported attempts to persuade the Chancellor of the economic value of the arts and creative industries.
"But she needs to persuade her education secretary as well, that for the sake of all children and the future of arts and creativity in this country, arts must be at the heart of the curriculum," she added.
"And she needs to promote the fact that arts and creativity is about much more than the economy: they're about a sense of identity, of community and the potential of each and every individual."
Ms Miller's speech came two months before the government's spending review, which will give details of which departments will need to cut their spending and by how much.
Last month, the Treasury wrote to departments warning most ministers they will have to cut up to 10% of their budgets for the year 2015-16.
Former Arts Council England chair Dame Liz Forgan told BBC Radio 4's World at One: "The danger in what she is saying is that people actually start to believe that because art produces huge economic benefits, we should start directing our investment in culture for its commercial potential.
"That's not only philistine, it's self-defeating, because then you get accountants making artistic decisions, which is as silly as having artists making accounting ones.
"If you start to invest in art because of an identified commercial outcome, you will get worse art and therefore we will get a worse commercial outcome."