Co-founder of Encore, Jamie Hillard, said the company needed time to get the production running, rehearsals organised and tickets on sale.

He said they have passed the timeframe to be able to achieve that for the March 2021 date.

"With current capacity limits and no definite easing in sight, the production is simply not financially viable, and if we tried to proceed the losses would finish our company," he said.

Current restrictions only allow for theatres in Tasmania to seat up to 50 per cent, subject to density limits.

"So, in the best interests of surviving as a company and presenting Mamma Mia as it is meant to be seen we must once again postpone, this time to October/November 2021, and subject to the Government lifting venue capacity limits to a true 75 per cent, as we are now seeing in Victoria and beyond," Mr Hillard said.

The cast and crew from the show know all too well the feeling of postponement, after the original March 2020 performance was moved to March 2021 due to COVID-19 restrictions.

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More than 8000 tickets were refunded or credited when the show was postponed originally and the company, run by volunteers, suffered a $180,000 loss due to the cancellation.

Belinda King, co founder of Encore said there was no state or federal financial support available to help the company offset its losses. They utilised saved funds to cover debts.

"This means we simply cannot risk going back into the Princess Theatre with the current capacity limits which would see us only being able to seat around 410 people in a 950-seat theatre," she said.

"In fact, while it was thrilling to be in the 'capacity audience' for Launceston College's Flashdance this week, it was also heartbreaking to know they could only seat 370 per performance."

The Mamma Mia stage show has been rescheduled to October/November 2021 at the Princess Theatre in Launceston.

Mamma Mia director Danny Gibson said the lead up to the show would be the longest that Launceston has ever seen, some 19 months from the original dates.