A funding row at the theatre where Sound of Music star Connie Fisher began her stage career could threaten many of its future productions, say managers.
Connie Fisher won awards for the West End show Sound of Music
Milford Haven councillors have voted to cut a grant to the town's Torch Theatre - which it is claimed "jeopardises" £120,000 Arts Council of Wales funding.
The Arts Council said it would urge councillors to "reconsider".
Fisher has won a string of awards since winning the BBC talent show How do you solve a problem like Maria?
The Torch Theatre - Pembrokeshire's only professional theatre - is currently undergoing a £5m redevelopment that includes a new art gallery, cinema and dance studio.
Fisher, from Haycastle near Haverfordwest, was a member of the Torch's youth theatre group as a teenager and made her professional stage debut there in a production of Aladdin in 2005.
Theatre director Peter Doran said: "About two years ago the Arts Council of Wales gave us some extra funding - this year it is £120,000 and next year its another £120,000 on condition the local authority do not withdraw their funding.
"Milford Town Council decided that they would withdraw 50% of their grant knowing that they would put this money in jeopardy.
"We are not talking about closure but we would have a brand new building and what's going inside would not warrant it - our programme would be reduced by more than 50%.
He said they were waiting for the decision of the Arts Council of Wales on their funding.
Milford Town Council contributes around £7,000 a year - half of the money is for local infant and junior school pupils to attend the Torch's Christmas pantomime
Town council Tony Eden explained: "Unfortunately because of the £5m project they are unable to hold the pantomime this year."
He said it was decided the £3,500 would be distributed amongst the schools for Christmas activities instead.
"Councillors would not have voted that way if the theatre had been in financial difficulties but the Torch produced a statement of accounts to us that showed unrestricted reserves of £133,000," he added.
"If the Arts Council came and said we are withdrawing our grant it would certainly be discussed and I'm sure there would be a solution."
Chief executive of the Arts Council of Wales, Peter Tyndall, said: "The theatre is a major asset to the town and its residents and we believe this gesture is short-sighted.
"We will be urgently contacting the town council and asking them to reconsider."