People's college in Nottingham has been judged inadequate. Two of its curriculum areas were graded very poor and five others were unsatisfactory.
Leadership and management were also unsatisfactory.
Of the nine colleges graded inadequate in this academic year, only Southgate college in north London, where eight out of 12 curriculum areas were graded unsatisfactory, comes close to being judged as poor.
In a scathing review of provision at People's, inspectors from the Office for Standards in Education (Ofsted) and from the Adult Learning Inspectorate (ALI) said the college "does not provide satisfactory value for money".
Their report castigated the college for its self assessment report, accusing it of "overstating the quality of provision in many areas".
The report added: "Managers have failed to ensure that all students receive a satisfactory standard of education.
"Students' achievements on many courses are unsatisfactory and the overall standard of teaching is low. Day-to-day management of many curriculum areas is unsatisfactory.
"Managers are not sufficiently accountable for the quality of teaching and the performance of their students. Lesson observation and staff appraisal systems are poor."
The future of People's college is now in doubt and the poor report increases the likelihood that it will be merged with one or more of the four other further education colleges in Nottingham.
The West Midlands Learning and Skills Council has delayed a decision on the restructuring of further education in Nottingham, originally due in January, until July.
A proposal for People's to merge with South Nottingham and Broxtowe colleges was mooted last year as part of the LSC's Strategic Area Review process.
David Hughes, the LSC's regional director, said he was postponing the decision because "it is so significant for Nottingham that if we get this wrong we will have another 20 years of horror and terror."
On the inspection report, he said: "It is clearly not acceptable and it shows the weaknesses in many areas of the college. There are many colleges operating in similar circumstances that get good reports.
"Our job now is to work with the college to encourage radical change. The focus has to be on getting better quality for learners."
People's is a medium-sized further education college on three sites. The college became a Centre of Vocational Excellence (CoVE) for health sciences in October 2003. The inspectors said student attainment in this area was good.
John Rudd, People's college principal, described the report as a "wake-up call" for the college and said they were determined to do a better job for their students in the future.
"Ofsted did acknowledge that we have focussed on the hardest to reach learners who have often had a negative experience of learning, but we must accept that too many of those who do enrol with us fail to complete their studies successfully."
Mr Rudd said that strategies had already been reviewed to ensure students got on the right course in the first place, and stayed the distance to achieve their qualification.
Management systems had been tightened up, and there would be a further fundamental review of how courses were taught. There had already been an improvement in retention, he said.
"Everybody at the People's college is proud of the regard in which we are held by our students and stakeholders. We are disappointed by the outcome of this review, but we are determined to learn lessons from it," said Mr Rudd.