The 850-pupil comprehensive, which includes 90 boarders, suspended Paul Vittle on Tuesday. Teachers at the Lyme Regis school had passed a vote of no confidence in Mr Vittle and the chair of governors, Eddi Woodbridge, after the announcement of threatened redundancies to tackle a pounds 100,000 deficit.
There were management and personality conflicts at the school and it is believed that if Mr Vittle had remained, staff action would have threatened the running of the school. Mr Vittle, 48, is to fight the decision.
The new chair of governors, Tony Terrett, a Conservative county councillor, said there had been management problems at the school and promised improvements would be made. Commenting on the suspension and Mrs Woodbridge's decision to stand down, he said: 'This sort of thing is never easy.'
John Haylock, the deputy head, and two other teachers have been told they will lose their jobs in December. Four other members of the 46-strong staff have taken early retirement.