The iconic Australian chocolate Fantales will be discontinued next month due to declining sales.

Nestlé confirmed they would cease producing their once-popular film-themed caramel lollies.

Nestlé Oceania Confectionery general manager Andrew Lawrey said the decision would come as "sad news" for many.

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The need for significant upgrades to the Melbourne confectionery factory along with declining sales led to the decision.

"Many of us grew up with Fantales and have fond memories of them. Despite the sense of nostalgia Fantales evoke, unfortunately people simply aren't buying them as often as they used to," Lawrey said.

"In addition, our Fantales equipment needs significant investment. It's become increasingly difficult to get the parts we need to maintain it, and with declining sales, replacing it isn't viable."

The chocolates were first created in 1930 and became famous for their "fan tales" of actors and musicians on its wrappers.

Staff will be moved to other roles within the factory.

Fantales will now be on sale for as long as stocks last.

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