England's General Teaching Council has ordered Elizabeth Williams, formerly of Littlecoates primary in Grimsby, to retrain after hearing that her teaching was weak and that pupils were not meeting expected standards.
The hearing in Birmingham was satisfied that Mrs Williams, who had taught at the school since 1989 and resigned in December 2002, had been incompetent.
But it said its ruling only covered the two years up to October 2002 and that it had taken into account her long service, health problems and prior performance.
Robert Bourns, presenting officer, said Mrs Williams faced the hearing because curriculum changes meant nursery teachers had to teach a more in-depth curriculum rather than just "supervising".
The panel heard how Mrs Williams's lessons were monitored by Helen Rudkin, the head, between May 2000 and October 2002. She regarded some of the lessons she observed as being unsatisfactory and weak.
In a statement, Mrs Williams accused Miss Rudkin of favouritism and said that the monitoring was oppressive and made her underperform.
But Miss Rudkin said the school would not have achieved its present, most improved, status if staff had not been treated equitably.