The U-turn is doubly damaging for Mr John. He has already been embarrassed by his involvement in the Romeo and Juliet affair, when he called for the suspension of headteacher Jane Brown for allegedly refusing tickets to a ballet production because it was a "heterosexual love story". Ms Brown's governors supported her and the school, Kingsmead primary, received a glowing Office for Standards in Education report.
Staff and parents at Hackney Downs are delighted about the school's reprieve and the head is now attempting to recruit more staff by September.
The result is another twist in the Victorian school's history. It was founded at the end of the last century by the Worshipful Company of Grocers for the sons of the guild's members and soon gained a reputation as one of the capital's finest schools. Old boys include Michael Caine, Steven Berkoff, Harold Pinter, Lord Goodman and Sir Arthur Gold, former chairman of the British Olympic Association. It maintained its reputation under the headship of John Kemp from 1974 when it changed from a grammar to a comprehensive.
The area has changed dramatically from a relatively prosperous City dormitory to an impoverished inner-city area. It has seen influxes of Jewish and East European refugees and now has mixed Afro-Caribbean, Turkish, Bangladeshi and Indian population; almost 30 different languages are spoken at the school.
It was in the early 1990s that the rot appeared to set in. When Mr Kemp retired he was followed by a series of temporary heads and a head who had to take long-term sick leave soon after arriving. There were internal divisions in the staffroom and the school's GCSE results showed that only 11 per cent had five or more A-C grades.
In January the local press reported a raid on a rival school involving boys from Hackney Downs and there were rumours of gang warfare and drug abuse.
By this time Hackney Downs had been transferred to the control of Hackney Council following the abolition of the Inner London Education Authority. The borough does not enjoy a high reputation for education; almost a third of its children are sent to schools elsewhere.
A proposal to make the school co-educational was turned down by the Department for Education. And parents and supporters of the school, in conspiracy-riddled Hackney, suspected the council's plan was to merge it with Homerton House boys' school.
Last summer an OFSTED inspection identified high levels of truancy, poor achievement, poor management, discipline problems and buildings in bad need of repair.
Governors at the school say they were told the council would support their action plan when Gus John had already decided to close the school. Mr John had said he did not believe the action plan was financially viable. He was said to have had support from Pat Corrigan, the then chair of governors and also chair of Hackney education committee. A council vote taken on March 21 to close the school was passed, but the battle continued.
Tony Burgess, current chair of governors, said: "In the same month Betty Hale had taken over as head and the school started to go forwards." He said the OFSTED report had been right to point out management problems which were now being addressed, but other problems - for example the state of the school buildings - were the fault of Hackney Council.
A town hall coup that resulted in new chairs of committees turned the school's fortune around. The education committee voted not to affirm the March 21 vote and not to endorse Mr John's observations on the objections.
This was followed by a heated, three-hour debate by the full council on June 28 and a motion reversing the proposal to close was passed by 31 votes to 23.
Nick Tallentire, the council leader, said: "Although on balance I thought the school should close I will now be doing all I can to help it succeed .. . Passions have run high and we must now put the same passion into turning the school round."