The Times Educational Supplement reports the independent but state-funded school established with the help of one of the world's biggest bands, Pink Floyd, has been forced to close after 40 years.
Schoolhouse Education, which claims it was the "original free school," is to shut its Lewisham, UK site in June after failing to attract enough students and losing funding from the local authority; its Greenwich site will remain open.
The school was founded to help disaffected students in south London, and was able to open thanks to a £1,000 donation from Pink Floyd, raised at an Oxfam concert in Wembley in 1972.
A newsletter published by teachers and students at the school in 1972 said: "Thank you Pink Floyd, without whom, quite literally, we would not have survived."
Originally described as a "daily tuition group" for nine pupils, the school was started by youth worker and teacher Brenda Moore and Martin Stellman, who later went on to co-write the cult film "Quadrophenia."
Current headteacher Lynda Smith said the pair started the school after seeing a group of children playing truant outside the Albany theatre in Deptford. "They saw a bunch of kids milling around and asked them why they weren't at school; it really started from there. For the first three years, everything was done out of the living room of one of their houses," Ms Smith said.
The school eventually received funding from the Inner London Education Authority, and with the proceeds from the Pink Floyd concert it flourished. Schoolhouse now helps 15 pupils aged between 14 and 16 who are unable or unwilling to attend mainstream school.
Ms Smith said the school's closure was "morally wrong."
"We have tried to stay open with schools buying individual places, but it's not financially viable," she said. "It's obviously a huge blow for us, a huge blow for the community, and obviously a huge blow to alternative education in Lewisham. Our students work really hard - 98 per cent go on to further education and it is an incredibly productive period of time for them. We have been around for so long and we are clearly succeeding," she added.
Last year the school was described as "good with outstanding features" by Ofsted, but the number of students being referred to the school has fallen significantly in recent years, meaning it can no longer pay for its four and a half teaching staff.
Lewisham Council said all its schools receive funding on a per-pupil basis and that the competition among alternative providers meant Schoolhouse lost out.
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