Only five of the 40,000 inspection reports completed since 1992 have been withdrawn.
The Office for Standards in Education has apologised to the school and admitted the inspectors' judgment was "poorly explained", "not substantiated securely in the evidence" and "seriously misleading".
The headteacher and staff at St Aloysius Roman Catholic College in Islington, north London, were devastated in January when inspectors from Westminster Educational Consultants found the school had "serious weaknesses".
Head Mike Pittendreigh thought school had already suffered enough from negative publicity in 1994 when Mr Blair sent Euan to the London Oratory in Fulham instead of the only Roman Catholic school in Islington.
He felt the inspectors' judgment was unfair and pleaded with OFSTED not to go public with the report until an investigation had been carried out. But the inspectors refused and made it available to parents, putting it on the internet in March.
The poor report made it difficult to recruit both teachers and pupils, said Mr Pittendreigh. He said: "It has been a difficult six months. After the report came out, a lot of time was devoted to reassuring parents.
"There has been an increase of stress and low morale among staff and children. We are delighted OFSTED has withdrawn the report and declared it not valid. It has been taken off the internet and it is as if it never existed.
"Since the report came out, a lot of higher-ability pupils have withdrawn their applications to come to the school so our intake is skewed. Teachers have also withdrawn their application (to join the staff) once they saw the report ."
The school has been offered another inspection, this time by one of Her Majesty's Inspectors, which will take place in the new academic year.
An OFSTED spokeswoman confirmed that its inspection quality division had ruled that the report be declared null and void.