The Oasis academy was due to open in September 2007, the first of five schools being sponsored by the Oasis Trust, a Christian charity. However, it has emerged that the budget set aside for the school in Enfield, north London, will not cover building costs.
Mike Rye, the leader of Conservative-controlled Enfield council, said that the effect of inflation and recent increases in construction costs in the capital, fuelled by the Olympics, had rendered the original budget inadequate.
But he said ministers, who have been stung by criticism over the cost of the first wave of academies, seven of which cost more than pound;30 million, were refusing to release an additional pound;4m he claimed was necessary to finish the work.
It means the academy will have to accommodate pupils in temporary classrooms until more cash can be found. Rev Steve Chalke, founder of the Oasis Trust, said the school, which will only be open to Year 7 pupils in its first year, would probably use "high quality" mobiles for 12 months.
It is not the first time work on an academy in London has been delayed because of funding problems. The TES revealed in May how construction of the proposed St Paul's academy, Greenwich, had been temporarily halted after it was revealed that the original pound;31m budget would not be enough. Mr Rye said: "Quite frankly this delay is unacceptable. We have put significant resources into this project, and to discover that its first students will be taught in temporary accommodation is most disappointing indeed."
According to the funding agreement, signed between the Government and sponsors, pound;29.2m had been set aside for the academy, which is among 100 of the flagship independent state schools currently open or in the pipeline. Mr Rye said a further pound;4m had been requested from the Department for Education and Skills but this was turned down. He said the two sides had now reached stalemate.
The DfES said Lord Adonis, the schools minister, had agreed to meet the council leader. A spokesman added: "Following higher than expected costs from contractors, we have provided further funding so the academy can open as planned in 2007. The temporary classrooms are of a very high standard and will provide a good learning environment while the academy is built."
Rev Chalke said: "I can hardly criticise the Government here. They are faced with a huge dilemma. Do they build the academy massively over budget and accept all the criticism that will come from the press, or do they try to reign in the budget, which will inevitably delay things a little? It is a difficult situation and one we're all working to resolve."