Fat Freddy's Drop has cancelled its Sydney Festival show citing "Covid travel restrictions", making the announcement in a social media post on Sunday afternoon.
The group had come under pressure to withdraw from the festival over Israeli embassy sponsorship of the event. However, the group says they will now perform a postponed show "completely independent of the Sydney Festival".
Kia ora Sydney, our Sydney Festival show on 18th Jan will not be possible due to Covid travel restrictions continuing...
"Kia ora Sydney, our Sydney Festival show on 18th Jan will not be possible due to Covid travel restrictions continuing across the Tasman", the group said in their Facebook post.
"We have negotiated that the postponement date will be Freddy's own show, completely independent of the Sydney Festival.
"Freddys are continuing to work directly with Hordern Pavilion to secure a postponement date. Ticket holders please hold tight, all tickets will remain valid. Appreciate your patience."
Earlier on Sunday, the Palestine Solidarity Network Aotearoa released a statement saying it wrote to the group on Friday with the request they withdraw from their scheduled Sydney Festival performance on January 18 because of the Israeli embassy's $20,000 sponsorship deal with the festival.
In accepting the donation, PSNA maintains "the Sydney Festival is using the Israeli Government Ministry of Foreign Affairs logo in festival promotional material and is aligning itself directly with the racist, apartheid state of Israel."
"We are urging Fat Freddy's Drop to show respect for the Palestinian struggle and pull out," PSNA National Chair John Minto said in a statement Sunday.
"We know this won't be easy or comfortable but it's the right thing – and the only decent thing – to do."
The Sydney Festival has said publicly that it is concerned about the controversy but does not intend to end the sponsorship deal.
Festival artistic director Olivia Ansell told media this week that "We feel immense empathy with the situation.
"It's sensitive, something being created to bring artists together, so we can see a myriad of perspectives."
In a report by The Guardian, president of the Zionist Federation of Australia, Jeremy Leibler, says the boycott is "appalling".
"The Sydney festival should be a safe space to celebrate the artistry and gifts of all peoples, including Israelis and Palestinians. Instead, the boycott organisers have attempted to make the festival culturally unsafe for anyone who believes in freedom of speech, and the freedom to have differences of opinion. It is appalling behaviour and the Jewish community condemns it outright."
More than 30 acts have withdrawn or distanced themselves from the festival, which opened on Thursday.