Education Secretary Nicky Morgan has confirmed that Durham Free School will be forced to close after inspectors accused the children there of being bigots for not knowing what a Muslim is. Other children at the Christian faith school, the majority of whom are under 12, were asked whether they were lesbians, whether they knew how babies were made, and what they would do if a Muslim came to the school. The Department of Education has confirmed that funding will be withdrawn at the end of March.

Durham Free School made headlines in January after pupils at the school were branded bigots after one child made a throwaway remark regarding terrorism when asked whether he knew what a Muslim was. In their report, the inspectors concluded: “Leaders are failing to prepare students for life in modern Britain. Some students hold discriminatory views of other people who have different faiths, values or beliefs from themselves.”

But teachers at the school argued that it was being unfairly targeted as a Christian faith school. Petrina Douglas, a parent governor, said “It feels like the school has been made a scapegoat. Durham is primarily white British so knowledge of other cultures is not as prevalent. But I don’t think the children are bigoted.”

The free school, which educates 94 pupils aged between 11 and 14 was praised by former Education Secretary Michael Gove when it opened in September 2013. But since then it has been verbally attacked in the House of Commons, with Pat Glass, the Labour MP for North West Durham, telling her colleagues that “the school had become a haven for every crap teacher in the North East.” She has since apologised for her “unparliamentary language”.

John Denning, the school’s Chair of Governers, said the staff were “highly skilled individuals who have been frankly slandered in the Houses of Parliament under the protection of parliamentary privilege”.

Mr Denning has also written to the complaints team at Ofsted to protest against the inspection, undertaken last November as part of a wave of inspections of free schools carried out in the wake of the Trojan Horse scandal in Birmingham.

The letter details inappropriate questions put to pupils which made some feel uncomfortable. He also recounts an incident during the inspection when “another inspector questioned a student alone in an isolation room […] The student concerned alleges that he was asked by the inspector personal questions about his sexuality and whether he had lost his virginity. The boy reports that he felt so uncomfortable about this that he was reluctant to disclose this to school staff. He felt embarrassed and unsafe at the time, and was glad when the interview was over.”

More than 50 pupils at the school have written to Ms Morgan begging her not to close the school. Jessica Goodwin, aged twelve, wrote: “What are you trying to do to our school? Is it really worth breaking these students’ hearts just to get election votes?” And eleven-year-old Chelsea Peat, speaking to the Newcastle Chronical pleaded with Ms Morgan not to close the school “when you haven’t seen it with your own eyes.”

Nevertheless, the school received a letter from the Department of Education this week which read in part “the Secretary of State has considered your representations. She has also taken into account representations made in letters and emails from parents and pupils of Durham Free School and others.

“Having considered all these representations carefully, the Secretary of State remains satisfied that it is appropriate to terminate the Funding Agreement.”

The school is now receiving legal advice over the decision, the Christian Institute has reported. Lawyers representing the school have already submitted an 18 page legal challenge to the Department for Education stating that Morgan has prejudged the case.

The challenge states “Our client has no confidence in your ability to make a fair, proportionate and lawful final decision in relation to the future of the school since you are not open to any representations”.