Theatre officials will stop using the term BAME (Black, Asian and Multy Ethnic), saying it is outdated.
Coventry's Belgrade Theatre said it made the decision after listening to local Black artists who want to see the term eradicated across the industry.
Echoing the reasons set out by Black Creative Network, the theatre said its use "reinforces the assumption of white British as the 'norm' or default". The move was "only the first step on a long journey", it added.
Recently, UK students and artists explained why they felt the term - which originated in the '60s and '70s - was no longer relevant to them.
Corey Campbell, co-artistic director at the theatre, said the decision had already attracted criticism but he stood by it.
Setting out its "statement of intent", the theatre said the group of West Midlands-based artists identified several problems with the term and similar acronyms.
It said: "Although originally intended to refer to groups of people as a means of measuring diversity across organisations... it stripped away people's individual identities and encourages us to see those who are not white British as a single, homogeneous group."
To assign a "single, collective identity to the vast range of racial, cultural and ethnic groups currently living in the UK, it assumed that all of these groups share broadly similar
experiences as well as reinforcing the assumption of white British as the "norm" or default".
The term also "conflated physical characteristics with geographic identity... Black, Asian and Minority Ethnic are not equivalent terms".
The theatre added: "It has always been important to us to provide a space where all of the people who make up our city feel seen and supported, and now more than ever, we want to listen to and act upon the requests of those who currently do not,".
BAME will no longer be used in its public and internal communications, but theatre officials said they accepted the acronym may still appear in some official documents they would be required to use.