The panel, led by the West End producer Thelma Holt, resigned last week in protest against changes brought in by the new Arts Council chairman, Gerry Robinson.
These changes involved a lesser role for the expert panels and no guarantee that the panel's chair would be a member of the new Council.
The Council hands out pounds 400m in grant and lottery cash to arts companies and venues in England.
Yesterday more than 50 leading lights in British theatre said they would be boycotting the Council. The list included the producer Sir Cameron Mackintosh, the director Sir Peter Hall, the West End producers Duncan Weldon and Bill Kenwright, William Weston, general manager of the Royal Shakespeare Company, and the heads of most of the subsidised companies in England.
They wrote to Chris Smith, the Secretary of State for Culture, who appointed Gerry Robinson and has supported his reforms, saying: "We totally support the reasons for the drama panel resignations, and we would not wish to serve on any Arts Council of England panel whose Chair is not a full member of the Council."
Mr Robinson, who is also chairman of Granada, defended his position yesterday, saying:"Panel chairmen will have the opportunity to attend and take part in Council discussion of substantive matters of particular relevance to their art form.
"Direct access to Council will be at whatever regularity is necessary to ensure good and well-informed governance."
But his assurances have failed to placate growing unease in the arts world.
Lady Deborah Macmillan has resigned as chair of the dance advisory panel, and the broadcaster Stephen Phillips has indicated that he will resign as chairman of the Council's touring panel.