Ofsted has upheld a formal warning issued by a local authority to a Leicester school's governors following a long-running dispute.
In the past year staff at Uplands Junior School have staged three one-day walkouts over restructuring plans.
Leicester City Council got involved after governors said they wanted to suspend four staff members.
Ofsted said steps taken by the council were "reasonable" and rejected the governors' appeal over the notice.
Intikhab Popat, a spokesman for the governors, said in a statement the group accepted the decision.
The council's warning notice in July said it would apply to the government to remove the governors over the issues at the school.
The governing body said it would defend its actions during the dispute and appealed against the council's threat.
However, Ofsted has since stated in a letter to the council: "The steps that the local authority is requiring the governing body to take are reasonable and proportionate to the issues that Uplands Junior School faces.
"Leicester City Council has provided convincing evidence that there has been a serious breakdown in the way the school is managed or governed which is prejudicing or likely to prejudice the standard of performance alone.
"Consequently, the governing body's appeal is not upheld and the warning notice is confirmed."
Mr Popat said in a statement: "The Governing Body (GB) accepts Ofsted's decision to uphold the local authority's warning notice served upon it.
"The GB will continue to work in the best interest of the school by discussing with the local authority, the unions and its members on how it can prevent any further proposed industrial action.
"The GB wishes for the school to return to normality and will be looking to work with the LA on the way forward."
The row between staff at Uplands and the management, supported by the governors, began almost a year ago when restructuring proposals included the loss of eight teaching assistant posts.
In March, staff backed a vote of no confidence in head teacher Tim Luckcock and the chair of governors Abid Matak over the loss of the posts and the way the school was being run.
A month later, staff reacted with anger when Dr Luckcock posted a picture of himself online wearing a turban, with the comment "almost going native" underneath.
He later explained the turban was worn as part of Diwali in a school celebration of the festival and the comment was a "colloquial" expression.