Speaking at the Edinburgh festivals yesterday, Fiona Hyslop said she understood fears that Creative Scotland's funding system – which will replace annual support with project-by-project funding – means it will be making key artistic or curatorial decisions.

Since the quango announced it would be removing flexible funding from more than 40 major companies in favour of the Lottery-backed scheme, fears have grown that the body will have the final say on future exhibitions and performances.

Yesterday Ms Hyslop sought to downplay the quango's artistic role, stating: "I am certain Creative Scotland is not a commissioning body."

She added: "I think there is a genuine philosophical discussion about the relationship between any arts funding body and artists, and I think that is what is lying at the heart of this.

"I can understand artists' anxiety about change, and I can understand their anxiety about wanting to make sure they are free to do what they want to do. I am passionate, I feel very strongly, that it is not for administrators, bureaucrats or governments to tell artists what to do.

"I don't think there is a debate about that from anybody, but I can understand the artistic sector wanting to protect that."

Creative Scotland has promised it will not "cherry pick" projects and insisted increased Lottery funding would mean more resources for artistic projects.

Earlier this month, Matthew Lenton, artistic director of the award-winning theatre company Vanishing Point, said it may have to move abroad if it is unable to work under the new funding scheme.

He added: "We need to try to make Creative Scotland see that unless something changes dramatically, there is a danger the theatre world in Scotland will be damaged fundamentally."

Vicky Featherstone, artistic director of the National Theatre of Scotland, said the funding controversy had left Scotland's theatre companies feeling "fragile and vulnerable".

In July, the Culture Secretary warned Creative Scotland she expected it to take seriously the views of artists and companies about its funding changes."