The Department for Education today said it had told the Discovery New School in West Sussex that it must close after expressing "grave concerns about the standards of education" it was offering.
Discovery New School in Crawley, West Sussex, has been told it must shut its doors on April 4 - the first time this kind of action has been taken.
In a letter to the school's chairman of governors, Chris Cook, Schools Minister Lord Nash said he was terminating its funding agreement. Discovery New School was declared failing and placed in special measures by watchdog Ofsted in May.
The sudden demise of the Discovery New School is likely to undermine confidence in Education Secretary Michael Gove's flagship programme.
Parents and governors at the Discovery New School in Crawley have expressed their dismay after it became the first free school to be closed.