A struggling Oxford school severely criticised by inspectors could become a new style academy.

An application is being made to the Government to transform Peers Community School into an academy, under the controversial scheme to improve performances of schools in disadvantaged areas.

In July, parents in Banbury gave their support to plans to turn Drayton School into the proposed North Oxfordshire Academy.

The Vodafone sponsored academy could open next year.

Now, the Oxford Diocese has agreed to sponsor the Peers project, which is likely to involve an investment of at least £1.5m.

The Bishop of Reading, the Rt Rev Stephen Cottrell, pictured right, who chairs the Diocesan Board of Education, said: "The possibility of sponsoring a new academy in Oxford would be a wonderful opportunity to develop our historical mission to provide the best education for children."

The proposal looks likely to win the backing of Oxfordshire County Council. Other organisations to support the plan include Oxford University, Oxford Brookes University, the Open University and Harrow, the independent school.

Peers School, a 1,000 pupil specialist college in Sandy Lane West, was placed in special measures last year after it was found to be failing in 24 out of 25 areas.

Ofsted inspectors criticised management standards, personal development, behaviour, teaching and attendance.

The Diocese has made an initial approach to the Department for Education and Skills.

If a Government feasibility study supports the plan, the starting date for the new academy could be as early as September 2008.

Academies were first introduced in 2000 as all-ability schools, established by sponsors usually from business, faith and voluntary groups in partnership with local councils.

The proposal comes after discussions between the Oxford Diocese, the Department for Education and Skills and Peers head teacher Lorna Caldicott.

Ms Caldicott said: "This is at an early stage - none of the formal consultation and involvement of staff and parents has started yet."

Shannon Moore, assistant head of learning and educational effectiveness services, said: "There are some other existing Church of England academies.

"The reason the Diocese has come forward is because it feels a duty to support communities where socio-economic factors appear to be barriers to success."

Nicola Sheldon, chair of Peers Governing Body, said: "The church has done everything it can to reassure people that it would be inclusive and open to students of any and no faith.

"The Diocese sees this as a way of meeting social need. People should not see it as some kind of way to convert people."