She has stewarded the magazine into its 40th year of publication - and potentially, it's last.

The literary journal funds about half of its operations through grants from Arts Tasmania; the rest is a combination of sales, advertising, and other grants and philanthropy.

This year, their Arts Tasmania funding request was not successful. The magazine has commenced discussions with the body to see if a solution can be found - if it can't, the publication could fold, Ms Field said.

"That was the first in what may be a number of meetings - it wasn't a decisive meeting, it was a preliminary meeting in terms of conversations about possibilities," she said.

"So at the moment all we can say is that discussions have commenced, and we appreciate Arts Tasmania's willingness to allow us to engage with that process."

The body received 210 applications for funding through six programs in their latest round, including Island, a departmental spokesperson said.

"Activities need to demonstrate sound and solid planning, and be achievable within the budget and timelines proposed," it said.

"The Tasmanian Government provides funds to support a vibrant and diverse cultural and creative sector, with multiple opportunities for funding throughout the year."

The magazine has been on the receiving end of an outpouring of support from the literary community since it learned its funding had been axed last Friday.

Writer James Boyce shared that it was an essay published in Island that formed the idea that became his book Van Dieman's Land, and other writers to comment on the impact the magazine has had on them personally include Danielle Wood and Ben Walter.

"Island has been part of the cultural fabric of Tasmania for a very long time," Ms Field said.

"It's made a real difference to many writers' careers and their confidence as developing writers, and it's made a real difference to the sense of Tasmania as a cultural hub.

"This isn't just a little magazine, it has a reputation on a national scale."

The magazine also missed out on Arts Tasmania funding in 2011, but managed to secure funding from the Australia Council for the year. They have already missed out on Australia Council funding this year, Ms Field said.

"These things do happen for all arts organisations," she said.

"From our perspective the magazine is very strong, it's sales and readership are at a high level compared to what has been in the past, our reader survey which we recently ran showed extraordinary satisfaction with the product.

"At this stage, our focus is on the negotiations."