The country’s first free school to be run by a for-profit provider has been placed into special measures by Ofsted.

IES Breckland, based in Suffolk, was judged to be “inadequate” by inspectors who visited the school last month, despite having the backing of one of Sweden’s largest free school providers, Internationella Engelska Skolan (IES).

It becomes the third of the government’s free schools to be placed into special measures because of concerns about poor standards of education.

The two others, Discovery New School in West Sussex and the Muslim Al-Madinah Free School in Derby, were both ordered to close - albeit only in part in regards to Al-Madinah - after receiving inadequate judgements.

The latest failure is likely to cause embarrassment for education secretary Michael Gove, who has viewed free schools as his signature policy, and will further heighten tensions between the Department for Education and the schools inspectorate.

Earlier this month, TES reported that IES had admitted the school was offering a sub-standard level of education following its own internal inspection.

The company decided to instigate the internal review after the school’s founding principal, Sherry Zand, left her role amid general concerns around the standard of teaching.

It found that Breckland’s standards were “not representative of our schools or our vision of how our schools should be”.

The full Ofsted inspection report is not expected to be published until Thursday, but the school’s new principal, Alison Tilbrook, has written to parents informing them of Ofsted’s decision to place the school in special measures.

Mrs Tilbrook said that her task now was to turn around the fortunes of the school and to “make beneficial recruitment decisions”.

“This is a challenge for all involved, but one that we are equal to,” she said. “The atmosphere in the school is fantastic and there is a real determination to succeed from staff and students. Our students are incredibly willing to learn and up to the challenge of working to achieve the best results they can.”

The National Union of Teachers (NUT) said that parents and students at the “so-called pioneering school had been badly let down”.

“The NUT calls on David Cameron to put this failing schools policy on hold,” NUT general secretary Christine Blower said. “His education secretary must be told to halt the approval process for new free schools until a thorough analysis of the record of all open free schools is carried out.

“In the meantime open free schools need to be brought within the local school system and given access to support from their local authority.”

IES Breckland was one of the country’s flagship free schools when it opened in 2012, and was the first in the country to be run by a for-profit company, after the parent-led trust behind the school entered into a 10-year contract with IES worth £21 million.

The money pays for the entire running of the school, including teachers’ salaries and IES’ management fee.