Teachers at an academy set up less than five months ago have learned that it cannot afford to employ them all.

The principal said this week that she would be forced to make redundancies because pay was swallowing her pound;5million budget, leaving nothing for books, equipment or running costs.

Westminster academy in central London is already under threat of strikes over the length of dinner breaks. It is one of many crises bedevilling the school and its twin, the nearby Paddington academy.

Both are sponsored by the United Learning Trust, a Christian charity.

Problems with the planning and supervision by the Department for Education and Skills and the local authority means pupils at both are stuck in unsuitable premises while they wait for new buildings.

Last week Lord Adonis, schools minister, provided a pound;1million hand-out for Paddington, which has had a higher profile since Labour MP Karen Buck threatened to remove her son.

But Alison Banks, Westminster academy’s principal, said this week that the only fresh money she expects from the Government will be to pay for redundancies she insists are essential to avoid bankruptcy.

On Monday, she told staff and governors that the school had been told that it must balance its budget from September. That means cutting staff pay and allowances by a fifth to save pound;1million a year.

Mrs Banks said that compulsory redundancies and changes to the curriculum would be needed as staffing was slimmed down.

Teachers said they were shocked by a suggestion that lessons in English as an additional language might be dropped at the academy, where most of its pupils are from ethnic minorities.

The school’s financial difficulties raise the possibility that one of the Government’s flagship privately sponsored academies might go bankrupt.