A Christian "tuition group" is successfully fighting for its right to give children corporal punishment by arguing it is not legally a school.
The Government has been trying to bring Tyndale Academy into line since 2003. But despite two official consultations and 399 letters and e-mails last year alone, it has made little progress.
Officials admitted this week that it would take a new act of Parliament to force the tiny, six-pupil academy in Forest Gate, east London, to register as a school.
In the meantime their efforts have had unintended consequences, sparking fears that home educators, religious supplementary schools and sports clubs could be subjected to Ofsted inspections.
In many ways the saga resembles the unsuccessful campaign by the Government and Ofsted to make Summerhill, another idiosyncratic institution, conform eight years ago.
But while Summerhill pupils vote on their own discipline policy, at "thoroughly Christian" Tyndale, rules are based on the Bible.
For Ferris Lindsay, the head, that means his primary-age pupils could be smacked on the palm with a teacher's hand for direct disobedience or acts they know to be wrong, such as persistent swearing.
Children aged five to seven receive a single smack, while eight to 11-year olds can get up to three.
He said the smacks "hard enough to register, but not enough to damage" were more effective than long, drawn out punishments.
"It is a small but important part of our discipline, which also includes stars, and all the other things that make up a positive approach to behaviour," Mr Lindsay said. The punishments are meted out only with parents' explicit permission and through their delegated authority.
A qualified teacher with 24 years' experience, Mr Lindsay said the sanction had been employed no more than 10 times over the past academic year.
When asked if it was happy with this policy, the Department for Children, Schools and Families said violence against a child was illegal and it encouraged anyone to bring evidence of assault to the police.
Documents show that Ofsted told the department about corporal punishment at Tyndale in 2004. Mr Lindsay said that no official had raised the matter with him since.
He set up the academy in 1999, directly after corporal punishment became illegal in independent schools, expressly because it would not be classed as a school.
"All we are asking for is the freedom to teach according to the philosophy set out in the Bible," he said. "We know we are out on a limb and odd, but we think there should be room for us to exist."
His case hinges on the official definition of an independent school, currently an institution providing "full-time education for five or more pupils of compulsory school age".
Because Government guidance says this means a minimum of 21 hours' tuition a week, Mr Lindsay argues that, by providing only 18 hours or less, Tyndale does not qualify.
An Ofsted visit in November 2004 concluded that teachers gave consistently good lessons, had good relationships with pupils and offered a broad and balanced curriculum but that Tyndale was full-time.
The Government then told Mr Lindsay to register as a school or face prosecution and a possible six-months spell in prison or a pound;5,000 fine.
He refused and, by November 2005, the department admitted that Tyndale, which charges pound;3,000 annual fees, did not meet the current definition of full time.
A year later, the Government began consulting on a wider definition of an independent school. But this was abandoned after scores of home educators objected, fearing they would be treated as schools.
This month, consultation began on another definition of independent schools, which could finally spell the end for Tyndale.
But because the proposed wording "the main organiser of a programme of education for children of compulsory age" does not specify academic education, it could unintentionally affect religious supplementary schools and sports clubs.