While groups who paint their faces black in the Border Morris tradition have said it has no racial connection, organisers have been approached by a group complaining about the practice.
The tradition dates back as much as 500 years and was used to disguise dancers so they would not be recognised.
However organisers have said they will no longer book dancers using full face black make up after this year.
Festival director Sandra Surtees said: "The use of full face black make up is an age old tradition, particularly within Border Morris.
"The Morris movement has always evolved over time and some sides have take their own decisions to move away from using full face black make up to other forms of colour and disguise.
"We have been approached by one group that has requested we no longer book sides that use full face black make up and another that has asked us not to change our policy and to continue to book these sides.
"The festival finds itself caught between two sides of this opposing argument.
"The festival has never wished to cause offence to any person and as such, from 2017, we will no longer book sides that use full face black make up.
"This will only impact on a small number of dance sides and festival visitors will still be able to enjoy a wide range of traditional dance from the UK and beyond."