Stanley Technical High School could be closed down and transformed into a £20million education academy.

The boys' school, founded in 1907 by philanthropic engineer William Stanley, was placed in special measures last year.

Ofsted inspectors found the school in South Norwood Hill was failing. There had been no significant investment and the school's 700 pupils were learning in inadequate facilities.

But a £20million plan to create an education and business academy for 11 to 19-year-olds could transform the school's fortunes.

Under Croydon Council's plans Stanley Tech would close in August 2006. The new academy, to be known as the Harris Academy, would open the following month on the same site as the old school.

Croydon's cabinet met on Monday and agreed to publish a formal notice proposing the closure of Stanley Tech in August 2006 and giving people one month to register their objections.

The academy would offer places to girls and boys and would specialise in business and enterprise with design technology.

Funding for the £20million academy would be provided by sponsors including Lord Harris of Peckham and the Whitgift Foundation. The Department for Education and Skills would meet the running costs.

The project has already received a £2million donation from Lord Harris who, despite suffering difficulties at school due to dyslexia, managed to build a successful career in the carpet industry.

He set up the Harris Foundation to help schools like Stanley Tech improve standards by providing financial support.

The council is also aiming to have the school out of special measures before the academy is launched.