Aydin Onac's policy of excluding sixth-formers from St Olave's Grammar in Orpington if they didn't achieve at least three B-grades in their first year tests left one student feeling he "might as well kill himself".
The former student who isn't named in the report by Bromley borough council had his offer for a place in Year 13 withdrawn.
The report concluded Mr Onac, 66, who was suspended from his post last year, was wrong to enforce the rule which left some children "medically diagnosed at risk of suicide".
A total of 16 pupils were affected by the school's policy of "grade exclusion" because they didn't achieve at least three B-grades in their first year tests.
Two families threatened the school with legal action and judicial review proceedings against the governing body of St Olave's were initiated.
However, the high-achieving school reversed its decision before a hearing took place and the legal action was dropped.
St Olave's operated a policy to maintain what it calls its "exceptional A-Level results". Dating back to 1571, it has sent a significant number of pupils to the country's top universities.
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