Education Secretary Michael Gove’s pet free schools project plunged further into crisis yesterday when the government axed funding for one of the first to be opened.

The Discovery New School, West Sussex, was was one of the first 24 launched with much fanfare in September 2011.

But it will close on April 4 following intervention by Tory Schools Minister Lord Nash, who told governors that he was pulling the plug over “grave concerns” at the standard of education provided.

Teachers’ union NUT demanded that England’s free schools programme be suspended following the latest bombshell.

News of the closure broke just 24 hours after inspectors said another free school in Derby was “in chaos” and had suffered a mass exodus of pupils and staff.

Ofsted visted Al-Madinah School two weeks ago, finding that “relationships between school leaders are destructive and deteriorating.”

Quality of teaching was poor and showed no signs of improving, it said.

Mr Gove has put free schools at the heart of his plan to strip English local authorities of control over education and hand management to a hotch-potch of private organisations.

They can be set up in any building and teachers are not required to hold professional qualifications.

NUT general secretary Christine Blower said: “The blame for the closure of this school lies squarely with Michael Gove and his free school programme which has failed to ensure that schools opened under the policy can provide a decent standard of education.

“No new free schools should be allowed to open and serious consideration needs to be given to bringing existing free schools under the accountability mechanisms provided for by local authorities.”

Free schools can claim a cash handout of almost £95,000 as well as start-up costs and extra payments to fund services provided free to other schools by councils.

Al-Madinah was paid £1,824,503 in direct funds from the Department for Education in 2012-13 while the Discovery New School was handed £377,978.

Ministry officials have been forced to turn back to the local authority following the West Sussex school’s closure.

The department confirmed that it was working with the council to find alternative places.