The London borough has spent more than pound;4 million in its attempt to turn round the former George Orwell school, but earlier this year its "superhead", Torsten Friedag, resigned amid rumours of fights among pupils. Just weeks ago, the Office for Standards in Education declared the East Brighton College of Media Arts, another Fresh Start school, to be failing.
The latest OFSTED report follows a two-day inspection of the school. It is expected to say the school has made significant progress since it was re opened last September in the monitoring of pupil progress and behaviour.
The truancy rate has fallen and the inspectors found the school a calm and orderly place.
However, inspectors are believed to have found that teaching was well below expected standards, with only just over 50 per cent of lessons observed judged to be satisfactory.
The governors will not receive the written report for at least another week, but the new head, John Hudso, has been told that the school is failing.
This new blow to the Fresh Start scheme for turning round failing schools came as a commission set up by the borough council to examine services for schools in the wake of a damning OFSTED inspection, produced its report.
The commission, chaired by Professor Tim Brighouse, (whose views on Islington's situation will appear in next week's TES) is due to report on Monday.
It is not expected to suggest Cambridge Education Associates - the private firm which won the contract to take over the management of Islington's education service - should adopt the Government's strategy of closing failing schools and re-opening them as "city academies". These academies, similar to Fresh Starts, are to be independent schools funded by central government, bypassing local authorities.
The commission is expected to call for changes that will give parents greater choice and encourage them to send their children to the local comprehensives, rather than to schools outside the borough.
GCSE pass rates in the borough are barely half the national average, with only 27.4 per cent of 16-year-olds achieving five or more passes at grade C or better.