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I'm currently running a always-on task where I Implemented a while True: loop to ensure a continuous run of my script. If I run this .py on pythonanywhere console it runs fine, however when I set up my always-on task if doesn't get past the loop.

When I remove the loop, it works fine. Is there any policy against infinite loops on always-on tasks?

No, it should work. How exactly does it fail? Have you added some logging?