When the lights went up, the Cannes Film Festival audience took to its feet, cheering. It was the kind of premiere directors dream about, especially for a first film.

But for Francesca Joseph and the stars of her debut feature Tomorrow La Scala! the joy was to be shortlived. Due to an unexpected disagreement with American composer Stephen Sondheim, their film, which was hailed by critics as one of the most promising British productions of the year, has been withdrawn from theatrical release this month and is to miss its British premiere date in Edinburgh.

The dark comedy, which stars British actress Jessica Stevenson, tells the story of a production of Sondheim's musical Sweeney Todd put on by a small operetta company inside a maximum-security prison. Made by the BBC in collaboration with the Film Council, its improvised screenplay was based on the director's own memories of staging the musical in a jail.

'When Francesca came to us she had several ideas for a film, including one set in a prison, but when she talked about her own experiences, this was the idea that stood out,' said Ruth Caleb, the co-producer of Tomorrow La Scala! 'I am very sad indeed about this decision.'

The film was due to take a prominent place in the schedule of the Edinburgh Film Festival, but was withdrawn from the programme at the last moment. Sondheim, who had given permission for the Cannes screening, objects to the use of the songs from Sweeney Todd . The BBC believes the composer may be planning his own film version of the musical and does not want to damage his chances of securing funding interest.

'Francesca wrote to Sondheim herself to ask for permission to show the film at Cannes,' said Caleb. 'I know it is a musical that is very close to his heart, but we were hoping things would be OK. We are only just telling all the people involved with the film what has happened.'

Negotiations with Sondheim have been conducted by the film's distributors, Portman, but there seems little hope now that it will ever be shown in British cinemas. The film does have permission, however, for a television broadcast and the BBC plans to show it on BBC2 in the autumn.

'From my point of view, I am very, very upset it is being withdrawn from Edinburgh, but it will hopefully still be seen by a lot of people when it goes out later this year on BBC2,' said Caleb.

Stevenson, the star of the film, is best known to television viewers for her roles in the sitcoms The Royle Family and Spaced , while Joseph, the director, has worked until now as a documentary-maker.

However, her popular television film The Driving School has already earned her a reputation as a rising talent in the industry.

The new artistic director of the Edinburgh Film Festival, the Australian film critic Shane Danielson, invited the producers to bring Tomorrow La Scala! to the festival immediately after he watched the screening in Cannes. A spokeswoman for the BBC said the corporation was still hoping for a resolution to the solution, but Caleb admitted she was beginning to regret the original decision to stick with a musical by a living composer.

'Unfortunately, the music is there all the way through and can't be changed,' she said. 'I wonder now if we should not have chosen The Magic Flute , because Mozart would not have minded what we did.'