A statement from event organisers said: "Following official government advice issued yesterday (Monday, March 16) we regret to announce that Rugeley Fringe Festival will no longer take place this May.
"It is hoped that we will be able to rearrange the event for later this year. We thank everyone, all the artists, suppliers and advertisers for their generous support and enthusiasm for this new festival.
"We hope, when it comes to arranging a new date, to have everyone on board again and to bring to the people of Rugeley a spectacular event."
The festival, that was set to take place from May 23 to 25, was part of the latest campaign to boost the town centre ahead of the power station redevelopment.
The first Rugeley Fringe Festival came after the first stages of demolition of the power station have taken place, which will be replaced by 2,300 homes, housing for the elderly, commercial buildings and a primary school.