Hackney Council has ordered the closure of a 260-pupil strictly Orthodox girls' school in Stamford Hill.
The council has issued an enforcement notice against Beis Trana School in Upper Clapton Road, giving it until August to stop using the school and play area and to remove play equipment and portacabins.
Five years ago, the council refused retrospective planning permission for the development of the rear gardens of four houses as play areas for the school, which educates from nursery age up to 16. The decision was appealed and dismissed but the school "failed to stop use as a play area".
In 2008, retrospective planning permission for the school was also refused and an appeal rejected on the ground that "unauthorised use of the site as a school and play area is harmful to the amenity of the occupiers of the adjoining properties by reason of noise, nuisance and disturbance".
The school appealed an enforcement notice served in March 2009 but it was dismissed last month.
A teacher at the school said: "The council are making a great mistake and are not enabling us to educate our children.
"It's a great shame. The students behave beautifully and the neighbours have never called the police. These children will be a pride to society. Discussions are under way for future plans but we don't want to disclose them."