AL-MADINAH, the Muslim Free School in Derby, was condemned as "dysfunctional" and "in chaos" in an OFSTED inspectors' report published on Thursday.

The school has been open just a year, but OFSTED inspectors (the group visiting the school included one Muslim) have ruled it inadequate in every category: "This is a school which has been set up and run by representatives of the community with limited knowledge and experience. Leadership and management, including governance, are inadequate and have been unable to improve the school."

According to OFSTED, the governing body has failed to ensure children are safe in school by carrying out proper safeguarding checks, and the performance of both pupils and teachers is inadequate. Poorly qualified and inexperienced teachers were appointed.

In a damning conclusion, inspectors said: "Despite their commitment to the vision of the school, the governors have failed the parents of this community who have placed their trust in them." The school will now be put into special measures.

OFSTED brought forward its inspection after complaints from former teaching staff emerged in the local press, alleging that all female staff, including Christians, were required to wear a hijab and a long skirt, and that girls were routinely seated at the back of class, behind the boys. The inspectors said that they saw no evidence of gender segregation in class, though the girls and boys ate separately.

Speaking to BBC Radio Derby on Thursday, the Prime Minister, David Cameron, said that the report should not be used as "a stick with which to beat the whole free-school movement. There are now hundreds of schools which have set up as free schools, and on average they have more outstanding and good ratings than established schools."

He said: "If they don't take immediate action to deal with these things then I think it is right it should close and I think it's absolutely right to intervene rapidly when these things aren't working properly."

The OFSTED report praises Dr Stuart Wilson, the interim principal, who was "striving in difficult circumstances, to keep the school going". 

On Thursday, Dr Wilson said: "We fully accept the report. It does match our judgement of where the school is.

"Obviously the report doesn't make pleasant reading for anybody - we don't want to be in this position - we wish we weren't in this position - but what we need to do now is to accept the report in full and use it to move the school forward."

The Schools Minister, David Laws, told the House of Commons on Wednesday that the Government had taken "swift action" to deal with the school's failings. A Department for Education spokesperson said on Thursday: "This report provides further evidence of Al-Madinah's failings. We are now even more convinced of the need for decisive and urgent action. Ministers had already put the school on notice that its funding will be cancelled unless there are major improvements."

The Al-Madinah Free School has about 400 pupils aged between four and 16. It opened in September 2012 with a grant of £1.4 million. Its first head teacher, however, resigned after less than a year.

A Roman Catholic school this week was made to back down after two 14-year-old Muslim pupils were barred from classes for breaking the school's dress code, as they refused to shave off their beards.

The pupils at Mount Carmel RC High School in Accrington said that it was part of their faith to keep their facial hair.

After talks with Muslim leaders, the school's governors said that one boy could return, but the policy has not changed. The case of the second boy is understood to be unresolved.

A third Muslim student, who had a moustache, was also reported to have been barred from the classroom, but he shaved and returned to his classes.

The head teacher of Mount Carmel, Xavier Bowers, said in a statement: "[There] will be no change to the school rule which requires boys to be clean shaven.

"However, following discussions with leaders of the local community, exemptions will be made in certain clearly defined circumstances.

"The school is advised that it is part of Muslim tradition and religious belief that a beard is a sign of commitment to the Islamic faith, but it is ultimately down to personal belief.

"Having said all that, as governors of voluntary aided schools we have to comply to the European Convention on Human Rights, as do all schools. As part of this legislation all schools must make reasonable adjustments to school uniform on genuine religious grounds."