Of England's 24 first free schools, three-quarters were rated good or outstanding by Ofsted
Four - outstanding
14 - good
Five - require improvement
One - Discovery New School, West Sussex - inadequate
"The future of our children starts now. Much has been said about our school. We, the governing body, have tried our best.
"We acknowledge the weaknesses within our school and have taken the Department for Education (DfE) recommendations very seriously.
"I plan to step down from my position as chair of the governing body as soon as the transition is over and this is clearly for the best interests of our children.
"In conclusion, we are ready to learn from our mistakes but not willing to fail our students."
'Lack of oversight'
A Dfe spokesman said: "We were already investigating this school before allegations became public. We discussed the problems with Ofsted and it launched an immediate inspection."
Labour's shadow schools minister Kevin Brennan MP said following reports of Ms Parveen's resignation:
"Another day, another episode in David Cameron's flailing flagship education programme.
"Al-Madinah is a symbol of all that is wrong with Cameron's free schools.
"Labour has long warned of the dangers: a lack of oversight, allowing unqualified teachers to teach on a permanent basis, and spending on free schools ahead of addressing the chronic shortages in primary school places."
Mr Cameron had said the Derby school should not be used "as a stick with which to beat the whole free school movement".
He added there were many free schools that had on average more outstanding and good ratings than established schools.
The Ofsted report followed a letter to the Trust on 8 October by Education Minster Lord Nash that laid out 17 issues.
These included forcing female teachers to cover their hair and failing to carry out background checks on staff.
He said funding would be pulled if urgent steps had not been taken within seven days.
However, the trustees now have to provide an action plan to show how fit they are to run the school, and how it will improve, by 1 November.