Six figures - including writers, journalists and activists - have backtracked after learning the annual event was receiving funding from Building a Stronger Britain Together (BSBT), a Home Office programme which funds various community groups.
The programme has been criticised for unfairly targeting members of the Muslim community, leading to the decision to withdraw from six writers and speakers at the Festival.
Bradford-born writer Suhaiymah Manzoor-Khan was first to announce she was pulling out, saying in a statement: "The government's counter-extremism strategy relies on the premise that Muslims are pre-disposed to violence and therefore require monitoring and surveillance, rather than that the material and systematic conditions of economic, racial and Islamophobic violence need addressing as causes of individual perpetration of violence."
Also to boycott are former National Union of Students president Malia Bouattia, activist Sahar Al-Faifi, feminist scholar Lola Olufemi, Waithera Sebatindira and journalist Hussein Kesvani.
Mr Kesvani was due to give a talk on Friday, June 28, with MP Imran Hussain, titled 'Conflicted Identity: South Asian British Youth', about his recent book Follow Me Akhi: The Online World of British Muslims.
He said speaking at the festival would be a conflict of interests after interviewing young Muslim Brits for the book, some of whom "expressed how the expansive counter-extremism programme had affected their ability to express their religious identity".
Speaking to the Yorkshire Post, Mr Kesvani said: "I decided to pull out out of respect to my sources in the book.
"My book is about how young Muslims have fashioned their own spaces to assert their identities, in ways that they feel is limited in their own lived experiences. And for a lot of those young Muslims, the atmosphere that the strategy has fostered especially in regards to surveillance, was a limiting factor.
"I felt they wouldn't have been okay with me telling their stories being told in a setting where [counter-extremism] had a key role."
A statement on Bradford Literature Festival's website said: "Some of this year’s projects are supported by the Home Office’s ‘Building A Stronger Britain Together’ fund (BSBT). The funding has allowed us to do important work with women’s community groups.
"This has been hugely valued by the groups themselves, and has received appreciative feedback from participants and community leaders.
"As a South Asian, Muslim-led organisation, BLF is entirely conscious of the opinion some parts of the Muslim community hold about the BSBT programme – and whilst we acknowledge and value the perspective and opinion, it isn’t one, on this matter, that we share.
"We regret that the support offered by BSBT to these specific projects has led to a number of speakers withdrawing from the festival programme. Our door is always open to working with these speakers in the future and we wish them well."