Dark Mofo will go ahead in June, but organisers are still trying to address widespread backlash after an artist wanted to soak the Union Jack in the blood of First Nations people.
Last month Spanish artist Santiago Sierra called for blood donations from First Nations people, from places colonised by the British, to soak the Union Jack in.
Before the artwork was withdrawn three days later due to outrage from people worldwide.
A statement on the festival's Facebook page on Saturday said there was no consensus yet on how to exactly address the fall out, but a program would be released later this month.
"All staff are being encouraged to express their views, and an internal review process has begun," the statement said.
"David Walsh and the state government have reiterated their support for the 2021 Dark Mofo festival to proceed as planned in June, under the direction of Leigh Carmichael."
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The festival's creative director Leigh Carmichael said, in a Facebook post, he had been deeply affected by the outrage.
"Unfortunately, our highly insensitive and offensive marketing campaign designed to bring attention to Union Flag failed to accurately represent the artist's intent. I understand why this mistake caused the outrage, the anger and the damage that it did," he said.
"The decision was made to withdraw. I felt it was the right thing to do at the time, but I'm concerned and sad that the conversation and other voices as well as the artist's have now been silenced."
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