A north London theatre has refused to host the UK Jewish Film Festival while it is sponsored by the Israeli Embassy amid the ongoing crisis in Gaza.
The Tricycle Theatre in Kilburn had been due to screen at least 26 films as part of the event in November.
The theatre said it would not accept any funding from "any party to the current conflict". It has offered to use its own resources instead.
The festival (UKJFF) said the Tricycle's demands were "unacceptable".
The Tricycle has hosted the festival for the last eight years, but now the UKJFF said it was taking it elsewhere.
Stephen Margolis, chairman of the UKJFF, said the situation was "extremely saddening" and the theatre was looking to politicise the festival.
"We have always sought to convey a wide perspective on the conflicts in the Middle East and initiate open dialogue with our audiences and guest speakers, and the Israeli Embassy have always supported us in this," said Judy Ironside, the festival's executive director.
"The Tricycle have refused to take this into account in their decision."
Indhu Rubasingham, artistic director of the Tricycle, wrote in a statement posted on the theatre's website, that it has always welcomed the festival and wanted it to go ahead.
"However, given the situation in Israel and Gaza, we do not believe that the festival should accept funding from any party to the current conflict. For that reason, we asked the UK Jewish Film Festival to reconsider its sponsorship by the Israeli Embassy," she wrote.
"We also offered to replace that funding with money from our own resources.
"The Tricycle serves many communities and celebrates different cultures and through difficult, emotional times must aim for a place of political neutrality."
She added: "To be clear, at this moment, the Tricycle would not accept sponsorship from any government agency involved in the conflict."
The festival was backed by actress Maureen Lipman, who said: "The Tricycle have decided to punish Jewish people in the diaspora for one view of what is taking place in the Middle East and that is quite unacceptable."
But National Theatre director Nicholas Hytner backed the Tricycle's stance, saying the theatre could "not have made clearer" their commitment to Jewish culture.
"It is entirely understandable that they felt obliged to insist that no government agency should sponsor the festival," he said.
"The Tricycle serves a diverse community with a notably diverse repertoire and it has a clear responsibility to make no statement about the dispute that is behind the current conflict.
"It greatly saddens me that the UKJFF have unwisely politicised a celebration of Jewish culture and I deplore any misrepresentation of the Tricycle's position."