Pardes House and its girls' school partner Beis Yaakov schools failed to deliver the national curriculum because too much time was devoted to religious education, judged OFSTED inspectors.
Standards in English and maths put the north London school near the top of national test tables yet other key subjects were neglected, said the inspectors' report.
Half of all lessons at the strictly Orthodox school were devoted to Jewish studies, leaving insufficient time to cover the national curriculum in any depth. Teaching in more than one in four lessons was judged to be unsatisfactory at both schools.
The inspectors' report said: "Special measures are required for this school because of the high proportion of unsatisfactory teaching, the narrowness of the curriculum and the weaknesses in leadership and management at Pardes House."
Pardes House in Barnet, and Beis Yaakov in neighbouring Brent, nominally merged in 1996 in a "marriage of convenience" to fulfil the equal opportunity requirements of the state system. They remained in their original buildings on their sites several miles apart and continued to be run as distinct institutions.
The school became voluntary-aided in April 1996 but the following month outraged the local authority by deciding to ballot parents on becoming grant-maintained. The school had hoped to opt out of local authority control by January 1997 but the application was rejected under the new Labour Government in September last year.
School governor Alex Strom said: "The inspectors do not recognise the value of our Jewish studies. It is not time for religious indoctrination, at the boys' school it is a programme of serious study which is very demanding and requires a lot of debating, logic skills and memory exercises. The pupils gain study skills which explain their high achievement in national tests.
"It is going to be extremely difficult for us to satisfy the inspectors and maintain our high standards - but we must. We recognise that if we take their money we must play by their rules."
Caroline Scharfer, headteacher of Beis Yaakov, claims her school would not be under special measures were it not for the management failures of the boys' school described in the OFSTED report. The two schools have now applied to de-merge. Beis Yaakov hopes to stay under Barnet Council control although it lies in Brent.
She said: "The inspectors highlighted areas of serious weakness at our school which we have already begun to address. The problems at the boys' school are a different set of issues."
The two schools propose different solutions to the inspectors' concerns. Pardes House plans to extend the school week by up to eight hours to create time for the national curriculum without cutting back its religious programme, including art and design classes on Sundays. At the girls' school, the foundation subjects are to be incorporated into Jewish studies time.
Mrs Scharfer said: "Art and design and technology are already being taught within Jewish studies, for example when they make artefacts for Jewish festivals. Music, history, geography and possibly IT can also be incorporated. History and geography will also be taught in secular time as we want our girls to have knowledge that is rooted in both cultures."