Jean Else was credited with a remarkable turn around in the fortunes of Whalley Range high school for girls after becoming its head in 1994.

She was made a dame in 2001 and enjoyed a good relationship with Estelle Morris, the former education secretary, and an ex-pupil at the inner-city secondary.

But this week Manchester council announced that it had taken over the management of her school with immediate effect after receiving a draft report from the Audit Commission.

Dame Jean has been suspended with two other members of staff, Maureen Ratchford, the school’s finance manager and her sister, and Stewart Scott, its director of governance, while the authority conducts its own inquiry.

The council has also taken control of the school’s budget.

The investigation into the financial governance at Whalley Range began at the end of 2002. Dame Jean said she would be pressing the commission to speed up the process so that the school could be cleared as quickly as possible.

But in March The TES learned that it had been delayed by at least three months because the school had failed to answer a series of questions put to it by the auditors.

The TES also revealed in September 2003 that the school had reached private, confidential settlements with three former members of staff in the space of nine months after they brought unfair dismissal claims.

There is no suggestion that the school admitted liability in any of the cases.

David Hart, general secretary of the National Association of Head Teachers, acting for Dame Jean over her suspension, said the council should not have taken such strong action before the school had had chance to respond to the draft report.

Mick Waters, Manchester’s chief education officer, said the council had acted in the public interest.