The Government's training quango, the Teacher Training Agency, has demanded an action plan from the OU, one of the biggest providers of new teachers in the country. The university risks losing both its primary and secondary training. In fact, it has already suspended the primary course for two years - a shock decision leaving 300 would-be students struggling to find alternative places.
It also leaves the Government short of primary teachers to help reduce the size of infant classes. The TTA this week invited other institutions to help make up the shortfall.
Inspectors from the Office for Standards in Education found that the OU's primary scheme fails to meet Government standards. Six out of 14 course components were poor quality and the remainder were judged no better than adequate.
The main defects identified by OFSTED relate to the OU's problems in developing partnership schools, because the university has no geographical links.
The school-based practice was poorly arranged, said the report, with some students ill-prepared to tackle whole-class teaching in literacy and number.
Although their subject knowledge was adequate, teaching and classroom management were poor - as was assessment and recording.
But the report has provoked fury on the part of the Open University which says it was based on a tiny sample, the weakest 2.6 per cent of its trainees - the majority of whom failed.
Furthermore, says the university, the students were criticised for not complying with regulations that did not exist when their 18-month, distance-learning course began.
The OU will be presenting its complaints to the education select committee's investigation of OFSTED later this year.
The news is a blow to students in remote parts of the country, and to those with families who rely on distance-learning.