Epping Forest College, which is caught in an industrial dispute with staff and sacked its last principal within six months of his arrival, has been judged inadequate by inspectors.
Ofsted said that despite satisfactory teaching, the college is failing in almost every other respect, with its achievement and standards, leadership and its capacity to improve all receiving the lowest grade.
It chided the governors for their poor monitoring of performance.
As well as the Ofsted judgment, governors face an appeal by the sacked principal, Peter Sadler, and a strike threat by the University and College Union. Union members are angry about the former principal's use of disciplinary proceedings and at the sacking of the UCU branch chairman, Hugh Hobson, before Mr Sadler's own departure.
A planned strike by UCU members was suspended last week pending negotiations, which were continuing as FEd Focus went to press.
Meanwhile, Mr Sadler was expecting the result of his appeal hearing, held on Monday last week.
The college's decline, said Ofsted, was swift: a monitoring visit last March found "reasonable progress" in almost all areas targeted by inspectors. However, when the full inspection took place in December, the college had appointed Mr Sadler and had submitted a self-assessment that rated its performance as inadequate - a view confirmed by Ofsted.
Inspectors said the college leadership was poor - it had three principals in 2008 alone.
The report said: "Governors are insufficiently rigorous in monitoring the performance of learners and have been slow to challenge managers about weaknesses in provision. The quality of information they receive has been poor, but is improving."
Jeannie Wright, the college's interim principal, said: "We acknowledge that until the beginning of last year the college had suffered from a period of historic instability and this is reflected in the Ofsted report.
"However our action plan, together with the recent move into our new Pounds 38m state-of-the-art campus, has made a significant difference to the experience enjoyed by our students and staff."