An Islamic school in Adelaide is at risk of closing after losing both federal and state funding.
The federal government has decided to end its agreement to help fund the Islamic College of South Australia from the end of the first school term in April, forcing the state government to do likewise under current funding arrangements.
While federal funds, worth about $4 million, were provided in 2016, the school has not received any state government cash, worth about $1 million, since about mid last year because of ongoing concerns over governance and financial management standards.
South Australian Education Minister Susan Close said the state government would continue with its investigations of the school but its future looked grim.
"I think we have to prepare for the school to close," she said on Thursday.
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"The federal government has not made this decision lightly and we also have outstanding questions and haven't funded this school for a significant period of time."
Ms Close said the 600 or so students would be welcomed into state schools, although, should the college close, some were expected to move to other private schools.
The minister said her "heart goes out" to all of the children and parents.
Federal Education Minister Simon Birmingham said the school had been given several chances since November 2015 and still did not meet the government's reasonable standards and expectations.
"Instead what we've seen are resignations - the principal and a number of board members - chaos and dissatisfaction from the parents," he said.
He said government funds should be used exclusively for the benefit of school children, not funnelled off to help other external organisations, not mismanaged due to poor governance and not subject to internal feuding.
"These are the types of problems that have beset this college over a prolonged period of time," the minister said.
"Enough is enough."
The school is yet to respond directly to the government's decision and has 30 days to lodge an appeal.
Acting principal Hanan Dallah last week wrote to parents telling them it had complied with all federal and state requirements, including the recent submission of compliance reports.
"Together the school leadership team, the board and all staff members will continue to work in the best interests of our students and school," the letter said.
Last year the federal government also stripped funding from the Malek Fahd Islamic School in NSW over similar governance and financial concerns.
The school continues to operate despite that decision being upheld in the Administrative Appeals Tribunal in January.
