The firm started remedial works on South Bank Primary school more than a year ago after serious cracks appeared in the walls.

But it halted the structural work following confirmation that most of the foundations were built on defective fill.

Now Carillion has decided that the problems are so severe that the school is being demolished and will be rebuilt on the same site with the contractor funding the entire project.

The school was opened in 2006 by Mowlem – just after Carillion bought Mowlem for £291m – as part of a four-site scheme worth £155m over 25 years.

But within two years cracks started showing on internal walls when the ground fill became saturated and expanded.

The other schools built under the same PFI deal – Gillbrook Technology College, Sacred Heart Primary School, Bydales Secondary School and St Benedict’s Primary School – are all problem free.