LONDON (Reuters) - Musical theater is traditionally associated with London's West End, but increasingly the city's tiny fringe venues are putting on their own cheeky, slimmed-down versions of the big shows.

In the past, these lesser-known theaters tucked away beneath railway arches or in the backs of pubs have avoided shows with music because of high production costs.

That is changing as performance rights become easier to obtain and audiences begin to realize small is beautiful, as well as a bargain in difficult times.

"I have always preferred to be able to see the whites of the eyes of the actors I am watching," said director, writer, actor and singer Martin Berry.

"In musicals, in particular, if they are done well, I think it can be tremendously exciting to be so close to the voices and the actors. After all, all you are hearing at Drury Lane (in the West End) are electronic sound waves from a giant public address system."

Berry has been performing to critical claim this month in "Anything You Can Do!" -- a two-handed musical adapted from more mainstream shows and accompanied by a single musician. It has been staged at Greenwich Playhouse, an 84-seat theater above a pub.

Such intimate spaces are often known as "fringe," although actors prefer the term "independent theater" to avoid any association with amateur.

Alice de Sousa, who runs the Greenwich Playhouse, said she had been marketing feel-good musicals as a bargain and a rare experience.

"You're within arm's length of the actors," she said.

Many of the audiences at Greenwich are drawn from tourists who flock to the village neighborhood in southeast London, home to the world's most famous observatory, a renowned maritime museum and the Cutty Sark, the world's last surviving tea clipper in a dry dock.

There is also a hard core of loyal residents, increasingly keen to avoid the cost of traveling into central London.

RUMBLE OF PASSING TRAINS

A night at a West End show can cost about 10 times the price of a production on the fringe, where tickets sell for as little as 10 pounds ($18.72) and where the quality can be very high.

"Could there be some disillusionment with several years of big budget West End musicals, especially jukebox musicals as they being called?" asked Berry.

A few miles west of Greenwich, in a railway arch near Waterloo Station, the Union Theater has a reputation for pioneering the low-budget musical.

In the past decade, its productions have gathered momentum and the occasional rumble of a passing train only adds to the atmosphere.

Its shows have included a version of "Cabaret" in which the audience sat at tables as they might have in the Kit Kat club, where much of the action takes place, and Irish writer Conor Mitchell's witty, cult musical "Have a Nice Life," based on the unlikely subject of group therapy.

Most recently, the Union has staged a sell-out production of Gilbert and Sullivan's "Mikado" following on from "HMS Pinafore" last year.

Musicals are close to the heart of the director of both productions Thom Southerland, even though he was told at drama school: "Musicals are rubbish. You're selling your soul."

Among those who attended his production of "Annie Get Your Gun," also at the Union early this year, was the grand-daughter of Irving Berlin, who wrote the Broadway hit.

"She said it was the best version she'd seen," he said.

(editing by Andrew Dobbie)