SYDNEY - More than 20 artists and performers have withdrawn from this year's Sydney Festival over its decision to accept a $20,000 donation from the Israeli embassy.

The Sydney Festival opened on Thursday but 23 acts have officially withdrawn from the festival to protest Israeli financial support for "Decadance", a Sydney Dance Company performance by Israeli choreographer Ohad Naharin.

Palestinian activists have called for boycotts of cultural events involving the Israeli government.

"Tell Sydney Festival that there's no place for artwashing ethnic cleansing, military occupation and crimes against humanity," the Palestine Justice Movement Sydney tweeted, calling for a protest on Thursday.

The festival leadership said they support all artists, including those who boycotted the event.

"We stand behind our artists who have decided to have their say and withdraw from the festival but equally, we also stand behind our artists that are going to continue in the festival," festival director Olivia Ansell said at the festival's opening.

Those boycotting the event include comedians Tom Ballard and Nazeem Hussain, Indigenous intercultural dance theatre company Marrugeku, the Bankstown Poetry Slam, and broadcaster Yumi Stynes.

The three-week festival is one of Australia's major arts and cultural occasions, drawing music, dance, theatre and visual art performances from around the world.

The festival's board said in a statement on Tuesday that it would review its practices regarding funding from foreign governments.

Around 30 percent of the festival's funding comes from Australian public entities and the remainder from private donations and partnerships.

Israel is listed as a "star partner" on the festival's website for its $20,000 sponsorship.