For Henrietta Barnett School, August should be a time to bask in academic success and prepare for the new term. This year, as in most other years, the north London girls’ school has secured a top spot in A-level tables.

But planning for the future has become almost impossible. Since 1993 Henrietta Barnett has been at the centre of a dispute which has divided the well-to-do residents of Hampstead Garden Suburb. The school has been threatened with eviction by its own foundation body, a charitable institute which runs an adult education college.

Even the Government has had to intervene, although it is treading carefully. There is more than middle-class sensibility at stake. The outcome could set a precedent for other foundation bodies. The Church of England, for example, might decide that it too can no longer afford to subsidise its schools.

When Henrietta Barnett broke up for the summer, staff and pupils had no idea if they would be able to return in September. Even now its future is only secure until the end of the year.

Headteacher Jane de Swiet said: “We were all extremely anxious because we had no clear idea what was going to happen. At least we now know for sure that we will still be here for the next term.”

The school and Hampstead Garden Suburb Institute were founded by philanthropist Dame Henrietta Barnett, and lie at the heart of the model residential development, which was also her creation The Suburb was built at the turn of the century as a leafy estate where, Dame Henrietta said, “all classes could live together in neighbourliness”. Today the neighbours are almost exclusively wealthy, and often lampooned for their obsession with minor planning applications and amateur dramatics.

They are devoted to their neighbourhood and take pride in both the highly academic school and well-regarded institute. Like the housing development both were founded early this century and intended to educate young and old side by side, “from four to four score”.

The schoolinstitute partnership developed as a kind of forerunner to the community school, used by girls during the day and adults at night.

Problems began when the institute, blaming dwindling adult education funding, attempted to make the school pay rent for the use of its buildings.

Institute council members decided they could no longer afford to subsidise a state school although the two had co-existed in harmony for almost 80 years. The school had found itself slowly squeezed out of its own buildings, reduced to hiring extra rooms for its daytime classes.

Rent negotiations came to nothing. So in 1993 the institute issued the school with a notice to quit, hoping to force its hand.

College principal Fay Naylor said: “It has never been our intention to force the school off the site but we can no longer provide the buildings rent free and we were advised this was the best way of triggering a point at which rent should be paid.”

Barnet Council, which runs the school, did not take kindly to the threat. Two writs and a High Court hearing later it hit back with a compulsory purchase order. The institute found it could not move against the school without itself being forced out.

But if the CPO is the council’s weapon, only the Department for Education and Employment can pull the trigger. Things looked up for the institute when a government inspector ruled the CPO should not go ahead, saying the institute could be better relied upon to protect the school’s interests, than the council to look after the institute.

The story became even more confusing in June when Education and Employment Secretary David Blunkett entered the argument. Overruling his inspector, he announced he was “minded” to approve the CPO after all.

With the notice to quit due to expire at the end of this month both the institute and the DFEE agreed a final stand-off - holding their fire until the end of the year and allowing yet more talks. Institute, school, council and DFEE will return to the negotiating table in September to thrash out a solution which has proved elusive for more than four years.

Both parties still hope for a resolution. Mrs de Swiet adds: “There has never been any animosity between the school and the institute. But it is not just about our case because any solution may have wider implications. It could set a precedent. Perhaps the church could charge rent for its schools.”