A headteacher who turned round one of England’s toughest comprehensives has been suspended during an investigation into the school’s pound;800,000 budget deficit.

Six months ago inspectors praised the “inspirational” leadership of Richard Ewen, head of the “rapidly improving” Islington arts and media school, north London, since 2000.

The Fresh Start secondary earned notoriety after a television documentary showed chaotic scenes in its classrooms four years ago.

The Office for Standards in Education also praised financial management at the school.

Bill Clark, director of schools’ services at CEA@Islington, the private firm running the borough’s education services, said there were serious concerns about the school’s handling of the deficit.

He said: “The school has a budget deficit of more than pound;800,000 and we do not have evidence that action has been taken by the headteacher to eliminate this deficit within a reasonable timescale.

“Last year, the deficit was pound;682,000 and CEA@Islington had agreed with the school that it would be reduced, but instead it has increased.

“There is a clear expectation... that local authorities should take action in circumstances such as this. We will be conducting a full investigation into the budget management of the school.”

The school had appeared to be putting its troubles behind it following a string of high-profile successes.

The fly-on-the-wall documentary in 2000 portrayed its disastrous relaunch under the “super head” Torsten Friedag. Mr Friedag resigned as controversy raged over Fresh Start, the government programme under which struggling schools were closed and re-opened with new staff and leadership.

He was replaced by Mr Ewen, a former head of Teddington school in Richmond-upon-Thames, who had been advising another Fresh Start secondary, Telegraph Hill in Lewisham, east London.

In 2002, the school was taken off Ofsted’s failing list, after being praised for improving teaching and pupil behaviour and for falling truancy levels.

Last year, it featured on Ofsted’s roll of honour for raising disciplinary standards. In January, government figures showed that its GCSE results were the 29th most improved in England.

After a visit in March, inspectors described it as “effective and rapidly improved”.

Mr Ewen’s “exceptional and inspirational leadership” meant all the staff shared a common vision.

“Good financial management ensures that the school utilises its budget very effectively. The governing body has drawn up a robust recovery plan to address a significant inherited deficit budget,” added the report.

An Ofsted spokeswoman said the inspectorate had been aware of the deficit when the school was inspected, but that inspections focused on strategic management of finances. Inspectors did not carry out audits of a school’s financial records.

Lela Kogbara, CEA@Islington assistant director, said: “We do a much more detailed analysis of the financial position in schools than happens under an Ofsted inspection.

“The headteacher has done brilliantly, improving results dramatically since 2000. But headteachers need to manage a range of areas, including budgets.

That’s where we have concerns.”

Judy Gemmell, a deputy head at the school, will take over in the head’s absence.