Andrew Lloyd Webber has pulled his latest musical out of a government pilot scheme for live events because theatre had been treated as "an afterthought and undervalued".
The composer's decision to withdraw his production of Cinderella was "baffling" and left ministers "bemused," a Whitehall source said on Friday.
The pandemic has had a catastrophic financial impact on the theatre industry and many have remained closed despite the ease in COVID-19 restrictions as it is not financially viable for them to open with reduced capacities.
The peer, 73, had previously provisionally registered to take part in the plan and earlier this week Boris Johnson said they were having talks and would "do whatever we can to be helpful".
Earlier on Friday, the prime minister said he was "very confident" lockdown easing could go aheadon 19 July, after the original 21 June date was delayed.
Lord Lloyd Webber said in a statement: "I have made it crystal clear that I would only be able to participate if others were involved and the rest of the industry – theatre and music – were treated equally. This has not been confirmed to me.
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"It has become clear that, while sporting events like Wimbledon had obviously been working with the government for some time on this pilot, and were even able to start selling tickets yesterday, the theatre industry and its audiences is, once again, an afterthought and undervalued."
He said the production, which is being staged at the Gillian Lynne Theatre, would open on 25 June with the venue up to half-full.
The composer, who quit as a Conservative peer in 2017, previously warned he may have to sell his six West End venues if the government does not relax its restrictions as set out in its roadmap for England.
In addition, he said he would be prepared to be arrested in order to fully reopen his theatres on 21 June if the easing of lockdown restrictions was delayed.
But on Friday he admitted such a move could leave cast, crew, orchestra, front and backstage staff, and even the audience facing fines of hundreds of pounds each which, he said "I couldn't possibly risk".
"If it were just me, I would happily risk arrest and fines to make a stand and lead the live music and theatre industry back to the full capacities we so desperately need."
He said he would personally bear the losses until he can fully reopen the theatre at maximum capacity.
Cinderella "is the product of hundreds of people's tireless effort for years", he said, adding: "Win, lose or draw, we have to continue."
A government source said: "We are bemused that Andrew Lloyd Webber has decided not to take part in the ERP (Events Research Programme).
"This would have given him the opportunity to have audiences at 100% for Cinderella and at the same time play a crucial part for his sector in the fuller reopening.
"It's baffling that he's pulled out and is instead opening his theatre at 50% given all the noise he's been making about opening fully and threatening to sue.
"It's completely false that the arts and culture sector hasn't been part of the ERP programme.
"We tested an array of settings including festivals, club nights, the Brits and the Crucible Theatre and are now in discussions with other theatres as part of the next phase of the programme."