St Brigid's, in Denbigh, a school for three to 18-year-olds, was allowed to "opt in" to the state sector by Rod Richards, the former Tory Welsh minister, in July 1996. It is the only school in Wales to have done so.
However, inspectors have found serious shortcomings at the 160-pupil school.
Teaching standards were unsatisfactory or poor in four out of 10 lessons in the primary department, with weak class control, deficiencies in the pace of lessons and low expectations of pupils cited as the causes.
The quality of learning was good in 40 per cent of sessions, with a quarter of classes, mainly at key stages 1 and 2, deemed to be poor with pupils lacking motivation and learning effectively.
Standards in a number of subjects, including science, history, geography, art, music and information technology, were unsatisfactory for this age group.
The secondary department fared better with the quality of teaching criticised in only 5 per cent of lessons, and inspectors dissatisfied with the quality of learning in 10 per cent of classes. However, they were critical of the assessment, recording and reporting procedures used by secondary teachers, stating that "assessments are not well used to promote higher standards".
The school was praised for its caring and community ethos, and the behaviour of youngsters.
Philip Eyton-Jones, the chairman of governors, said: "This report reflects the hard work of teachers and governors in progressing their new status. We have much to celebrate and we are determined to build on the strengths that the inspectors have recognised."