Unity City Academy in Middlesbrough has high numbers of pupils with special educational needs and a third of its teachers are newly qualified.
The verdict is a setback for the Government's 5bn academy programme.
The Government hopes that academies, which are part-funded by private sponsors, will drive up standards and it plans to build 200 by 2010.
Chris Keates, general secretary of teaching union NASUWT, said: "It is evident from the report that teachers have been striving to do their best in extremely difficult conditions. Urgent action is needed to develop a recovery plan for the academy."
- www.ofsted.gov.uk.
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