Shrewsbury Folk Festival is refusing to book dancers who wear such make-up, following accusations of racism.
But the Flagcrackers of Craven, who rehearse at Farnhill Institute, say the style of dancing at the centre of the controversy dates back to the 16th century and there is no suggestion of any racial slight.
The group adds that early references to the blackened faces indicate they were used simply as a disguise.
Festival bosses imposed the ban following an approach from an organisation known as FRESH – Fairness and Racial Equality in Shropshire.
Cowling man Alan Perrow, a long-standing member of the Flagcrackers, said: "It is ironic that the black-faced stick-clashing style in question, known as Border Morris, originates from Shropshire – the very place where the local festival has made this controversial decision.
"Festival organisers do the job for their love of folk music and dancing – there is no money in it.
"It is unfortunate that FRESH appears to have frightened them into removing a 500-year-old tradition from its birthplace.
"There is no racism in morris, either in the dancing or music."
The Flagcrackers, who have been performing in Yorkshire and at festivals across the UK and internationally for nearly 30 years, have vowed to continue using the black-faced style.
And they will welcome other Border morris teams, including the Shropshire Bedlams, to their dance events.
Flagcrackers squire, Julie Greenwood, said: "We plan to continue to give pleasure to audiences wherever they will have us and sincerely hope that FRESH and other well-meaning but misguided people concentrate the fight against racism on cases where individuals or groups are genuinely racially offensive and dangerous, rather than entertainers whom crowds of all race and creed enjoy watching.
"It's fair to say that we are 'offended' at the implication that ourselves and other teams are racist!"
In a statement, Shrewsbury Folk Festival organisers said they had been accused of racial harassment and threatened with legal action by FRESH following performances by morris sides wearing the full-face black make-up.
"The festival finds itself caught between two sides of this opposing argument and believes this is a national issue that should not be focused solely on the festival," it said.
"The morris movement has evolved over time and some sides have made their own decision to move away from using full-face black make-up, towards other forms of colour and disguise.
"We are aware that is an emotive issue and our decision has not been made without a great deal of thought, but we have taken our lead from the morris teams which have already changed their disguises.
"This will only impact on a very small number of dance sides."
FRESH had not responded to a request for a comment when we went to press.